Apple Inc. (NASDAQ: AAPL) investors and long-time bulls have begun to grow increasingly cautious with respect to the new Trump Administration’s ability to put forward a budget that will include a lower repatriation tax. Last week, the company’s stock fell approximately 3%, largely on discussion surrounding the potential for impeachment proceedings against President Trump, and therefore, the country’s prospects of introducing a “repatriation holiday” for companies such as Apple.
With an overseas cash hoard of more than $257 billion, Apple is a unique company in that it has a mix of assets spread around the globe which have continued to grow over time, with the company openly reluctant about bringing this cash back into the U.S. market due to the repatriation tax penalties involved in doing so. A repatriation tax, which was proposed by President Trump during his campaign, would allow Apple to reinvest its overseas cash in domestic opportunities, or use the funds to increase its dividend, repurchase shares, or a combination of all three.
The argument many analysts make is that the cash which is sitting overseas (much of it in marketable securities earning a decent return) would be better utilized domestically, to the benefit of shareholders. Apple has continued to raise long-term bonds to pay dividends and support domestic activities, while storing large amounts of cash overseas to limit its tax burden in the short-term.
Over the coming months, a lot will be riding on the new Administration’s ability to get the budget passed with such a repatriation holiday. Investors will continue to watch this closely, and Apple’s stock price will likely see volatility relating to any news coming out of the budget discussions in the short-term.
