Apple (AAPL) tumbled slightly on Tuesday, retreating from Monday's move upwards.
Shares declined 0.2% on the day, declining $0.38 to $174.24 in trading hours as a late rally into close was stopped short of turning the stock positive. Shares declined over 2% in pre-market hours amid the trade bluster.
"I believe, in light of Apple's recent slide, that investors should consider the current risks associated with holding its shares," Seabreeze Partners Management President Doug Kass said. "One significant risk is that the Apple iPhone finds itself in the crossfire of President Trump's trade dispute with China."
The most recent decline is being spurred on by heightened trade war talk from President Trump in an interview with The Wall Street Journal, published on Monday evening.
"Here's the story: If we don't make a deal, then I'm going to put the $200 -- and it's really $67 -- billion additional on at an interest rate [sic] between 10 and 25 depending."
The Journal's reporter Bob Davis asked if that would include iPhones, the staple product of Apple.
"Maybe. Maybe," the president replied.
Analysts quickly added the previously "background noise" issue to their forecasts, putting yet more pressure on demand.
"Now (CEO Tim) Cook and Apple find themselves squarely at the center of the tariff talks which were previously background noise," Wedbush analyst Daniel Ives wrote in a note on Monday night. "With ASPs for the iPhone in the $800 range and consumers clearly price sensitive around higher smartphone prices the last thing Cook and investors want to see is additional tariffs added to iPhones."
He acknowledged that the talk from Trump could indeed be yet more bluster to encourage a more favorable trade deal, but nonetheless urged caution on the "near-term overhang" until more clarity becomes available on the negotiation.
Offering Entry Point
Some analysts have still maintained their strong outlook for the company moving forward, especially as it wields over $100 billion in free cash flow to buy back its stock at these lower levels.
"We maintain our Outperform rating, as we think that in an increasingly "risk-off" environment, AAPL with its strong balance sheet, aggressive buyback, and ability to drive gross margins higher remains a core large-cap tech holding," RBC Capital markets analyst Amit Daryanani said.
Loop Capital's Ananda Baruah echoed the sentiment, noting a reined-in estimate but bullish overall outlook.
"We are maintaining our Buy rating as AAPL's EPS power of $15.00 and median P/E of 15x still make it an attractive long-term investment in our view," he said.
Stay Patient Until Panic
That said, there may be more room to fall before an ideal entry point is identified.
Jim Cramer's Action Alerts Plus team own the stock for the charitable trust and are continuing to hold shares as they ascribe a longer term bullish outlook to shares of the company. However, the team is not adding to its position yet, as a bottom has yet to form in their view.
"For those who already own shares as we do, we continue to believe that AAPL is a stock to be owned, not traded," the team advised in a note on Friday. "We are not yet calling a bottom. We need to see sentiment shift and believe it better to pay for more knowing a base has put in than try to catch the absolute bottom."
Cramer reiterated that there remains too positive a sentiment on Wall Street for a bottom to have formed in his daily rundown at the NYSE on Tuesday.
"Until we get convincing downgrades, there's still too many analysts that like it, it's hard to form a bottom," he told TheStreet's Katherine Ross. "You need to see some analysts panic."
Eye of the Beholder
Of course those that think "the worm has turned" and those that think its safe to bite into may both hold some truth. It may simply be a matter of perspective.
"Apple is a Rorschach Test of investors," Real Money contributor James "Rev Shark" DePorre declared. "The way it is perceived says much more about an investor's investing approach than it says about Apple itself."
He noted that investors like Warren Buffett, who recently became the company's second largest shareholder, view the company as a safe parking spot for money amid market uncertainty. To these investors, the long term thesis remains and short term dips do little to impact their thesis.
However, for traders, DePorre noted that the stock offers little play.
"The big growth days of Apple are behind it now," he said. "It may be a blue-chip stock and will be a safe haven for conservative investors but if you are looking to produce superior returns it doesn't offer much."
DePorre therefore was ambivalent in his advice, deferring to investor goals for their investments.
"Apple isn't inherently bad or good," he added. "It depends on how you look at it."