I forget the exact letter of the law, but according the flag code, the guitar is alright. The only disrespectful nonflag products are certain towels or blankets, because under the flag code they meet all the qualifications of an American flag. There is no penalty for manufacturing a towel or blanket as it is protected under the first amendment, but the more respectful recreations will include some sort of feature that makes it not an American flag. In 2018 an amendment was passed that allowed for such articles to include a "stylized flag" as part of their design. The first part of the flag code outlines what constitutes an American flag, and it is written so that incomplete depictions of a US flag do not have to follow the rest of the code, so that particular guitar is protected.
Because of the first amendment, the flag code is more a recommendation than law. For example, most people know that the flag shouldn't touch the ground, but most people don't know that it also shouldn't touch anything below it, such as a table or merchandise.
It's a whole 50 point document. If you are feeling patriotic on this fine Independence Day, feel free to read it in the last few moments of it. It may not make a profound impact on your life, but their is some neat stuff in their if you're into it.
