Is Apple Finished? Reaction to Tariffs Shaking the Tech Giant’s Future, Should You Sell Your Stock

Summary

Earn Your Leisure Podcast: Episode Summary

Title: Is Apple Finished? Reaction to Tariffs Shaking the Tech Giant’s Future, Should You Sell Your Stock
Release Date: April 8, 2025
Host/Author: EYL Network

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Introduction

In this episode of Earn Your Leisure, the hosts and analysts delve deep into the current state of Apple Inc., assessing whether the tech giant is facing an inevitable decline due to escalating tariffs and other operational challenges. The discussion centers around Apple's financial health, strategic responses to global trade tensions, leadership effectiveness, and the implications for investors holding Apple stock.

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Is Apple Effectively Done?

Analyst 1 kicks off the conversation by posing a critical question: "Is Apple effectively done? Is it time to take them out of the two tech index philosophy? Is it time to abandon ship?" (00:44). This sets the stage for a rigorous analysis of Apple's future prospects amidst rising tariffs that could push the price of the iPhone to unprecedented levels, potentially reaching $2,200 for the most expensive model.

Analyst 1 further highlights Apple's position as a leading stock in major ETFs, noting, "Apple is the leading stock in a lot of major ETFs" (00:44). This underscores Apple's significant influence in investment portfolios and the broader market.

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Impact of Tariffs on Apple

The core of the discussion revolves around the impact of tariffs on Apple's production and pricing strategies. Analyst 2 emphasizes the importance of leadership in navigating these challenges, stating, "Rule number one is a CEO man. And man, everything that happens on your watch is your fault." (01:56). This criticism is directed not at Tim Cook specifically but at the company's strategic moves in response to external pressures.

Analyst 3 brings attention to the delay in shifting production to India as a strategy to mitigate tariff impacts: "They've been working in India for three years. Right. They're saying potentially. Right. If they expedite this, the manufacturing in India, it could account to 15% of production." (05:40). The slow transition reflects potential vulnerabilities in Apple's operational resilience.

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Leadership and Strategic Decisions

The analysts debate whether a change in leadership is necessary for Apple to navigate its current challenges. Analyst 2 expresses skepticism about whether a new CEO alone can solve Apple's issues: "I don't even know if a new CEO changes this." (06:19). The consensus leans toward the view that broader strategic shifts are required beyond just leadership changes.

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Financial Health and Investment Considerations

Analyst 2 highlights Apple's robust gross profit margin of 46.52%, labeling it as "amazing" for a non-innovative tech company (02:19). This financial strength is a key factor for maintaining bullish sentiments toward Apple, despite current market challenges.

However, concerns about Apple's drawdown potential are addressed. Analyst 2 points out, "Even though they got they boot smoke today with Nike, what's the drawdown this year for Apple?" (02:10). Compared to Tesla, Apple's drawdown is significantly smaller, which is a positive indicator for risk-averse investors.

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Production Shifts and Global Strategy

The episode delves into Apple's strategic move to shift some production to India to counteract tariffs. Analyst 3 explains the slow progress and the challenges of ramping up production: "They've been working in India for three years... it can increase it from I think now where it's at like maybe 7 to 8% to up to 15%, which is a large jump." (05:40). The time-consuming nature of establishing new manufacturing bases raises concerns about Apple's ability to swiftly adapt to trade disruptions.

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Stock Analysis and Future Outlook

Analyst 2 provides an honest take on the longevity of Apple's challenges, suggesting that the "day [when Apple] could drop under 20" is not immediate but could happen by 2034, potentially even moving to 2032 (02:19). This long-term perspective maintains a cautiously optimistic view of Apple's resilience.

Analyst 1 queries the continued inclusion of Apple in the two-tech index given the perceived decline in innovation and strategic delays. Analyst 2 responds by emphasizing the importance of drawdown management and profit margins over mere innovation (08:22). The discussion underscores the balance between financial stability and growth potential in investment decisions.

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Risk Management and Investment Strategy

A significant portion of the conversation focuses on risk management, with Analyst 2 stressing the need for investors to consider geopolitical risks, fundamentals, and technicals when evaluating Apple stock (06:29). The analysts caution against complacency, noting that Apple's current comfort with its market position may be a vulnerability in the face of external shocks.

Analyst 2 also touches upon the importance of understanding how much risk an investment can absorb: "The number one thing you have to factor in in business is how far can this thing drop and can you withstand the pain." (08:03). This perspective is crucial for investors aiming to mitigate potential losses in volatile markets.

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Conclusion

The episode concludes with a nuanced view of Apple's future. While acknowledging the significant challenges posed by tariffs and slower strategic shifts, the analysts recognize Apple's strong financial footing and relatively low drawdown compared to other tech giants like Tesla. The consensus suggests maintaining a cautious but optimistic stance on Apple, emphasizing the importance of risk management and long-term investment horizons.

Analyst 2 encapsulates the sentiment by advising investors to keep Apple in their portfolios for its stability and potential, even if it isn't the top priority: "If you're looking two years out. But if we. I was starting a portfolio from scratch. What I put them there first over Nvidia. Absolutely not." (08:32).

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Notable Quotes

• Analyst 1: "Is Apple effectively done? Is it time to take them out of the two tech index philosophy?" (00:44)
• Analyst 2: "Rule number one is a CEO man. And man, everything that happens on your watch is your fault." (01:56)
• Analyst 3: "If they expedite this, the manufacturing in India, it could account to 15% of production." (05:40)
• Analyst 2: "The number one thing you have to factor in in business is how far can this thing drop and can you withstand the pain." (08:03)
• Analyst 2: "If you're looking two years out. But if we. I was starting a portfolio from scratch. What I put them there first over Nvidia. Absolutely not." (08:32)

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Final Thoughts

This episode of Earn Your Leisure offers a thorough examination of Apple's current challenges and future prospects, blending financial analysis with strategic insights. For investors and enthusiasts alike, the discussion provides valuable perspectives on navigating the complexities of investing in a leading tech giant amidst global economic uncertainties.

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#earnyourleisurepodcast

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Timestamp Reference

• [00:44] Analyst 1 discusses Apple’s status in major ETFs.
• [01:56] Analyst 2 emphasizes the importance of CEO leadership.
• [02:19] Analyst 2 elaborates on Apple's gross profit margin and drawdown.
• [05:40] Analyst 3 explains the production shift to India.
• [06:19] Analyst 2 questions the impact of a new CEO.
• [08:03] Analyst 2 talks about risk management in investments.
• [08:32] Analyst 2 advises on Apple’s position in investment portfolios.

Transcript

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[Analyst 1]

Going to play no games. Let's, let's jump right into this. The first thing I want to talk, I'm going to ask you is, is Apple effectively done? Is when I say done I mean like is it time to take them out of the two tech to index philosophy? Is it time to, is it time to abandon ship? Because it's like if tariffs is really going to happen and this iPhone is going to come to $2,200 for the, for the most expensive one. Right? We already talked about all the other problems that they have and Apple is the leading stock in a lot of major ETFs. Q. I think it's the lead in XLK and it's the, it's the leading stock in a lot of people's portfolio. Warren Buffett sold a lot of his Apple stock. We'll talk about him later. Is has the day come to abandon Apple?

[Analyst 2]

I mean I just said last week we needed a new CEO and you called me crazy. It hurt my heart. Well, you can't hear local.

[Analyst 1]

You can't blame this on Tim Cook though. This is this the tariff thing.

[Analyst 2]

Rule number one is a CEO man. And man, everything that happens on your watch is your fault.

[Analyst 3]

That's true.

[Analyst 2]

That's so. Oh but they made the move to India to offset tariffs. Great way to play late.

[Analyst 3]

That was even part of the question last week, right? Like is their day coming when they drop under 20? Obviously now they went down under 30. But hey, where we at?

[Analyst 2]

I'm gonna give my honest take about this and it's not because I created two Tattoo Index. If I made you money, please put yes in chat. Is that day here now? No. Do I think it could happen before 2034? For sure. Let's start with the positives. Gross profit margin 46.52% for a fledgling non innovative tech company. That is amazing. You can't take that away. And the number one, please write this down. The number one reason I constructed Apple and Microsoft into the two tech two index scenario is drawdown. Even though they got they boot smoke today with Nike, what's the drawdown this year for Apple? Please put it in chat. Y'all said y'all want me to restore the filling to bring the old essence back. I got you. What's the drawdown this year thus far? So if you compare Apple to Tesla, Tesla drawdown is two to three times bigger than Apple. So when you're building your portfolio the gains are important, but how much you can draw down is the most important thing you want to factor in. And then profit margin. If that Profit margin was 30 or 29, Mortal Kombat, Flawless victory fatality, I would be replacing them for Nvidia a long time ago. Now what I don't like about the business, not a lot of innovation. They are like even this tariff move. No, you can't solely blame him. But if you've been to the White House during this administration and last you knew this was coming, how are you just now making an adjustment to make that move in India when you know India's market is more important important than ours in terms of market share going forward for the next 10 years. I think he's react too slow. It's like when Harden started doing a step back and then like everyone started doing it. I remember the days when they would innovate and they would lead. So it's a time yet. But will I maybe move that date up from 2034 to 32? Probably.

[Analyst 1]

Well, 2032, I mean that's still a long. So you're still bullish on Apple.

[Analyst 2]

Yeah, 46.52 gross profit. Yeah, for sure.

[Analyst 1]

I'm just asking because I know. Yeah.

[Analyst 2]

I'm not attacking my brother. You my guy.

[Analyst 3]

As long as those statistics stay the way they are, obviously it makes a lot of sense. Yeah, I think the, the question for the people, a lot of people who are watching now is that is this the bottom for Apple? Right. This is 27 down as of today. There still might be some room to fall here. Right. When we're talking about terrorists. We saw, I mean we were just sitting, just watching our phones. Now the China retaliatory tablet came through at 34%.

[Analyst 2]

Yep.

[Analyst 3]

We come back now we add another 50% without 104 tariff. We know China like 104% is crazy. China accounts for 80% of Apple's production capacity. What that does to the business. I know we spoke about India. It's so interesting when we would talk about India and we talked about the declining sales of the iPhone inside of China, we said maybe it's not a product, it's a new region. But it speaks to how long it takes to get these businesses up and running, these factories up and running.

[Analyst 2]

Sure.

[Analyst 3]

They've been working in India for three years. Right. They're saying potentially. Right. If they expedite this, the, the manufacturing in India, it could account to 15% of production. And that's after three, almost four years infrastructure together it can increase it from I think now where it's at like maybe 7 to 8% to up to 15%, which is a large jump. But it took four years to do that. Right. You're talking about tariffs that are happening now. There might, there's not going to be another four years sustain this. And so something has to happen. Right. Like we gotta, they gotta figure something.

[Analyst 2]

Out here or like a new CEO.

[Analyst 3]

Well, I don't even know if a new CEO changes this. Right. Because the CEO of the country, the way he's moving.

[Analyst 2]

Okay.

[Analyst 3]

It's really tough.

[Analyst 2]

You're right.

[Analyst 3]

Right.

[Analyst 2]

You have a qu. I have a question for you. When you guys plan Invest Fest, do you start three months before or the day after? Invest Fest over. The most important thing for a leader is contingency. My first thought every day is what combination of factors could put me out of business they got too comfortable with? And I said this in stock club. I'll say it here. Geopolitical risk first, then fundamentals, then technicals. You can't r your way out of this. So I think Apple got too comfortable. And the thing is, okay, we went to gtc. When's the last time we've heard any significant news come out of Developer Day at Apple?

[Analyst 3]

In terms of product or in terms of software?

[Analyst 2]

Anything.

[Analyst 3]

Yeah, I mean it's the typical, the iOS update, the new MacBook, the new iPad they tried with the Vision Pro that really didn't work. So the products are lacking and we've covered that.

[Analyst 2]

Apple Intelligent. If that was a financial product, it would be a Ponzi.

[Analyst 3]

Right. I mean, every quarter it seems it's almost getting forgot about in the rollout of announcements. Right. Like that was supposed to be part of the phone. When it dropped in September, they said it was going to be there by December. We're here in April. They still haven't really I mean it's there but nobody's really using it to its full capabilities. They have. Their June summit is coming up and so there's a possibility there.

[Analyst 2]

I hope so.

[Analyst 3]

I don't know.

[Analyst 2]

Apple loads about 151.47.

[Analyst 1]

Apple load the boat 151. Okay, all right, all right. You heard it there. That's lower than the 52 week low for sure. That's low. That's pretty low. But you gotta like Apple at this price though. At least on a dollar cost average.

[Analyst 2]

Yeah. If you're looking two years out. But if we. I was starting a portfolio from scratch. What I put them there first over Nvidia. Absolutely not. Absolutely not.

[Analyst 3]

But you would add them to the portfolio.

[Analyst 2]

Yeah, they're probably sixth, seventh, eighth man.

[Analyst 1]

So. So okay, so for my personal. I'm just personally curious if they're the seventh man and you wouldn't put them ahead of Nvidia then why. Why are they still in the 2 tech 2 index? Why isn't it Microsoft and Nvidia for.

[Analyst 2]

The 2 tech minimum of draw? What's Nvidia's drawdown?

[Analyst 1]

So the minimum, the risk reward ratio.

[Analyst 2]

Ratio especially you being a. That makes sense approach, being conservative. The number one thing you have to factor in in business is how far can this thing drop and can you withstand the pain. A lot of you traders right now are getting destroyed thinking that every trade that you could. I know people who were short in the market who got whipped out to the upside because their stop was too tight and then it dropped to where it was supposed to go. The first thing I'm always factoring in is how much risk will this investment buy me if I can mitigate that. Keep that within even the worst case scenario if we have full out contagion micro excuse Apple and Microsoft together may draw down 42 on average. This including the Stevie Steve Jobs years. If Apple goes to 42 Tesla's gonna be 89%.

[Analyst 1]

Yeah.

[Analyst 3]

That volatility is over with.

[Analyst 2]

Like you can't. And all the fundamental analysis you'll go through and all the charts. That's great. When you're down 72% you're not thinking anything rational. You're gonna sell earn Rewards.

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