Jim Cramer, the famous investor who has held Apple stock for over a decade, says he’s worried.
Cramer worries that Apple will lose easy revenue due to regulatory disputes, geopolitical tensions, and OpenAI’s latest moves.
Apple lost the crown of the most valuable company on the planet in April, as its market capitalisation fell below Microsoft.
Nvidia has also surpassed the iPhone maker in terms of valuation, with Apple now trading at the number three most valuable company.
The company beat earnings estimates in its second quarter, despite a 10% drop in iPhone sales.
Apple’s shares fell 0.13% on Thursday. The stock has fallen 17% this year.
Easy money to lose
Cramer says that Apple’s first problem is the $20 billion it lost to Google because of the antitrust lawsuit against Alphabet, the parent company of Google.
Alphabet pays Apple $20 billion per year to ensure that Google is set as the default search engine for iPhones and iPads.
The US Antitrust Case against Google was brought because of its search engine monopoly.
Cramer claimed that Apple can make money in other ways, such as charging for other search platforms. However, the deal with Alphabet was “$1 per share of easy profits which could disappear”, according to him.
Legal battles
Cramer is also concerned about Apple’s case against Fortnite creator Epic Games.
Cramer said that Apple’s fight with Epic Games about app store payment could result in another 30 cents of earnings per share being lost.
A federal judge recently criticized Apple for not complying with its promise to open up the app store’s payment options.
A judge had ordered that Apple, based in Cupertino, stop charging fees for payments outside of Apple’s system.
Apple takes a 30 percent commission from all payments made through its App Store.
Five years after Apple banned Fortnite, the game is finally available in Apple’s store.
Trump Factor
Apple’s plan to move its manufacturing from China to India could also be hampered by US President Donald Trump, who wants more.
Trump has recently criticised Apple for its decision to build their new factory in India.
Trump would like Apple to produce in the US. This could result in a 13-fold increase in costs.
Apple would lose its margins on the flagship product if it did not raise prices. The drop from $450 down to $60 is a significant reduction.
Cramer also flags that as a potential problem. Making iPhones in America could undermine “one of our greatest American triumphs” to the rival Korean smartphone manufacturer Samsung.
Apple would be in a mess without Trump’s approval, he says.
CNBC Mad Money host said that US regulators were also looking at Apple’s deal with Alibaba.
Cramer stated that this was Apple’s best new source of business in China.
He says that the deals were once viewed by Americans as a strength. Now, they are seen as a weakness for America and as boosting China.
OpenAI Threat
Cramer is concerned about OpenAI’s acquisition of an Apple Design Chief-founded startup by OpenAI.
Kramer says that OpenAI’s attempt to create AI-enabled devices is an ambiguous bid by Apple.
While he doesn’t worry about the long-term, he will not buy any more stock at this time.
The post Cramer’s Apple worries: Here’s why could be updated as new information is released.
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