Why Sony Stock Swooned on Monday

As a non-U.S. company quite dependent on the tastes and sentiments of consumers, Sony (NYSE: SONY) is particularly vulnerable in the current tariff war.

That, at least, was the take from an analyst who downgraded his recommendation on the Asian electronics giant on Monday. Judging by their reaction, investors readily agreed, as they sent the company's stock to a nearly 3% loss in price Monday. That fall was steeper than the S&P 500 index's 0.2% slide on the day.

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The tariffs will be trouble

Before market open, Wolfe Research's Peter Supino enacted the downgrade. In his view, Sony is now only a peer perform (read: hold), as opposed to the outperform (buy) of previously. As per his company's policy, he did not assign a price target to the stock.

According to reports, Supino's latest take is based heavily on -- no surprise -- the sweeping tariffs imposed by the Trump administration. His concern is that the rising costs that are likely to arise from such measures, combined with declining consumer confidence, will sap business from consumer-dependent companies like Sony.

The pundit added that while the company has stockpiled a certain amount of inventory in this country, it will still feel the impact of a weakening consumer dynamic.

Not a good time for the gadget gang

Sony, which in many ways is the world's ultimate gadget company, is definitely vulnerable in the current environment. Electronics are already non-essential (for the most part) discretionary items, and they tend to be affected in slumps like the one that's surely coming. I think Supino's downgrade is, unfortunately, appropriate for Sony stock at this time.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.