As U.S. stocks suffered their steepest drop of 2019, Big Tech was hit particularly hard. Microsoft, Apple, Amazon, Alphabet and Facebook — the five most valuable U.S. companies — lost a combined $162 billion on Monday, leading the broader market route, which was sparked by concerns of a trade war with China.
President Donald Trump announced last week that, as of Sept. 1, the U.S. would impose a 10% tariff on $300 billion of Chinese imports, signaling an inability for the world’s two largest economies to come to terms on a trade deal. Stocks had their worst weekly performance of the year, and continued plummeting on Monday after China allowed its currency, the yuan, to fall to its lowest level against the dollar in over a decade.
Tech’s big five companies lost $66 billion in market value on Friday, and Monday’s plunge brought the two-day drop to $228 billion. Apple had the biggest percentage decline, falling 5.2%… Apple has more exposure to China than its Big Tech counterparts because it’s so reliant on the country’s manufacturing plants for its top products, most notably the iPhone. Facebook, Google and Amazon have almost no presence in China.
MacDailyNews Take: This too shall pass.
This is one area where Apple is the leader and shouldn’t be. Apple needs to use some of that reserve cash to lessen its contact with China. Tim Cook can spend his time yapping about security and privacy, but almost no gives a fig about that. The only thing that matters is how many iPhones are being sold. If they become more expensive then certainly fewer will be sold.
Apple should have acquired a cloud computing business and it would have reduced the company’s reliance on China. The cloud would have been a nice growth path for increased revenue but Apple is the only major tech company who decided not to have a shared cloud business. An opportunity missed and Apple shareholders will have to suck it up.
Making anything in another third world hellhole isn’t good enough…..