Hold tight! Apple investors may be in for a rough ride


Apple is worth more than the entire US energy sector combined
AAPL has had a turbulent year.
Photo: Ste Smith/Cult of Mac

CNBC’s Mad Money host Jim Cramer says that Apple investors are going to have to buckle up for a bumpy ride.

“You need to strap yourself to the mast if you’re gonna hold onto this one,” he said. Cramer is mainly concerned about what will happen if China’s “Communist Party does anything to limit iPhone production.” That could prove disastrous for Apple.

Cramer was responding to a Goldman Sachs report about Apple’s future. Goldman analysts claim that Apple’s earnings could fall 30% if China bans Apple products. Since China represents a massive growing market for Apple, this would have a major impact.

There has already been concern about how the recent Huawei ban could wind up hurting Apple. “[If] President Trump keeps blacklisting Chinese technology companies … they might feel compelled to go after Apple,” Cramer said.

But things could go further than that, too. Many of Apple’s devices are made in China. New tariffs could result in already steep iPhone prices being increased if they’re introduced. “Apple’s supply chain is deeply embedded in China, and Goldman says they can’t move their production any time soon,” Cramer continued. “[T]he consequences could be serious, especially with the next iteration set to come out this fall.”

A challenging year for Apple

The last year has certainly been an up-and-down one for Apple. The company has hit $1 trillion, seen its stock price crash, entered a death cross, recovered, and then fallen again. On the one hand, there’s worry that decisions beyond Apple’s control could cost it big. On the other hand, investor Gene Munster has suggested that Apple stock is set to rocket up 70% in the next two years. If he’s accurate, this would make Apple a $1.5 trillion company.

No-one’s exactly sure exactly what’ll happen. Jim Cramer’s advice? Be ready for continued choppy waters, but stay holding on. “I still believe you should own Apple,” he said. “I’m not trading it.”

AAPL is currently trading at $182.78. That gives the company a market cap of around $840 billion.

Source: CNBC