In response to the fall in Apple’s share price, Professor Radu Tunaru from the Kent Business School has said that tax concerns and the risk of regulatory fines are worrying investors, and this is having a knock-on effect on the wider stock market.
‘Investors have been queueing up to buy the shares of technology companies and in the aftermath of the subprime crisis in 2008, when most banks, hedge funds, private equity funds were looking for the next asset class that will make them rich, technology stocks rose to the top. This was seen by some as the “new miracle” of the economic markets and helped them forgot the subprime crisis.
‘Now, though, with the recent sudden drop of the Apple share price there is almost a sense of something apocalyptic happening – if the tech stocks are gone what are we going to do? And perhaps even more importantly, why is there a drop when everything we do is online, and companies like Apple are at the heart of this? The answer is very simple – tax.
‘Many of those companies were reported in the press as paying almost nothing on tax. Because of President Trump’s international commercial protective nationalistic battle, all other large economies are insisting that the tech giants will pay their fair share of tax. Hence, technology company stockholders are looking at a reduction in future revenues plus possible large fines for the past behaviour of these companies.
‘This double whammy effect contributed most probably to the sell, sell signal that impacted the share price of those tech companies that are truly global and who need a large number of users to generate their profits.’
The University’s Press Office provides the media with expert comments in response to topical news events. Colleagues who would like to learn more about how to contribute their expertise or how the service works should contact the Press Office on 3985 or pressoffice@kent.ac.uk
See ‘In the media’ (right) for selected coverage.