How Big Tech Stocks Might React to A Bernie Sanders Presidency…

If Bernie Sanders were to become president, it could be good for Roku Inc.(ROKU) and a problem for Apple Inc.(AAPL) and Inc.(AMZN), according to a DA Davidson first-take look at the potential impact of Sanders' proposals.

Sanders, who cemented front-runner status in the Democratic primary with a win in the Nevada Caucuses, could be bad for big FAANG companies that may stand to lose corporate tax breaks if Sanders were to defeat President Donald Trump later this year and gain a Democratic majority in the U.S. Senate, DA Davidson analyst Tom Forte wrote in the latest in a series of looks at presidential candidate policies.

Education Policies Could Ramp Consumer Spending
But one of Sanders' proposals could be a huge boost for several big companies, particularly those that depend on consumer spending, including companies like Amazon and Apple.

If Sanders were to be able to pull off his education proposals, including the creation of tuition-free college opportunities, the canceling of student debt for nearly 50 million Americans and raising the starting salaries of teachers, it could be a boon to corporate America – even though it might be paid for with corporate tax breaks.

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Those policies would provide a larger educated work force, and the forgiveness of student loan debt could create 45 million Americans “with a LOT more discretionary income,” Forte wrote. That could be the most beneficial of Sanders' policies for the companies he tracks, he said.

Forte said a Sanders presidency would be most favorable to Roku, and least favorable to Apple. Here's why.

Bring On The Broadband
Roku stands to benefit because Sanders wants all consumers to have broadband internet access. Roku can exploit higher broadband penetration with gains in advertising revenue and sales of hardware, Forte said.

Another company that should benefit if Sanders were to win is Qurate Retail Inc.(QRTEA), Forte said. But it's not so much that Sanders would benefit Qurate, the parent of TV shopping network QVC, it's that anybody who ousts Trump would likely make things better for companies that depend on TV watchers having care-free, idle time.

“On the assumption that the core consumer of QVC/HSN has been distracted since the 2016 presidential election primaries, Qurate Retail Group stands to benefit from someone other than President Trump in office,” Forte wrote in the note.

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Apple Tax Worries
Apple is one of the largest tax paying companies in the country, and an end to corporate tax breaks makes it one of the companies that should least like to see a successful Sanders presidency. Forte said the Trump tax cuts helped Apple's stock because they freed up capital for Apple to return money to shareholders through buybacks. Amazon would also be hit hard by a president seeking to collect more in taxes from the biggest companies.

Apple and Amazon are also in the payments space, which might be negatively impacted if Sanders, as he has suggested, were to seek a credit card and loan interest rates, Forte said.

Unions Could Pose Difficulty For Amazon
While the tax hit would be a problem, the biggest issue for Amazon should Sanders move into the White House would be his stated desire to see unions double their membership.

“Amazon, for the most part, has avoided unions at its U.S. operations and we believe this would materially increase the cost of its labor,” Forte wrote.

He also noted that if Sanders were to push to turn gig economy jobs, such as food delivery and ridehailing drivers, into union jobs, it could be problematic for GrubHub Inc. (GRUB).

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