Why Shares of Apple Are Getting Hammered Today

Shares of consumer tech giant Apple (NASDAQ: AAPL) traded over 5.6% lower today as of 12:52 p.m. ET, extending its sell-off after President Donald Trump issued far-reaching tariffs late last week. Wedbush analyst Dan Ives lowered his price target on the stock in a research report issued yesterday, while maintaining a bullish rating.

"Tariff Armageddon"

Ives, who has long been bullish on big tech stocks in the "Magnificent Seven," has issued several sobering research notes in light of Trump's tariffs. One from a few days ago said that the tariffs will "set the U.S. tech world back a decade, in our opinion, while China is the clear winner... and we see no debate." In his recent note on Apple, Ives maintained an outperform rating, but lowered his price target from $325 to $250.

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"The tariff economic Armageddon unleashed by Trump is a complete disaster for Apple, given its massive China production exposure," Ives wrote. "In our view, no U.S. tech company is more negatively impacted by these tariffs than Apple, with 90% of iPhones produced and assembled in China."

Additionally, Ives points out that Apple gets more than half of its Mac computers and at least 75% of tablets from China. He also noted that moving its manufacturing presence to the U.S. is not realistic, and believes such measures would take three years and a roughly $30 billion estimate just to move 10% of its production and supply chain to the U.S. without significant disruption.

What's next?

Apple's best chance for a reprieve would be to get some kind of exemption from the Trump administration, like it received during Trump's first term. However, the administration has not shown any signs of backing down yet. As of this writing, Apple's stock had fallen over 19% over the last five trading days.

I don't think implementation of these tariffs would lead to Apple's downfall, but they will likely cause significant earnings pain. Long-term-oriented investors can buy the stock, but you should be prepared for significant near-term volatility.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.