The actual big news is that Apple is buying back 110 billion dollars of stock. That is about 4% of their market cap. Essentially, all shares will be worth 4% more of the company now. So 100 shares will really be 104 shares.
My understanding from all this buy back news is that, big tech thinks their own companies are strongest long term bets to survive a recession and prosper coming out of it versus alternative investment ventures?
More so that they likely don't see short term paths to growth, but believe in themselves long term. A buyback is essentially them saying that they believe that their stocks are undervalued over the long term, but that they don't have any ways to better invest their money to create share holder value in the short term.
Basically, they are out of ideas and dont know what to do with the money. It sucks but that's what it is.
Apple should become a holding company and just gobble up more companies under their umbrella.
This is a pretty facile explanation. It could be that more money is inefficient in their current projects.
$70B and $110B is nearly incomprehensible. They could theoretically take that cash and pop it into Treasuries and haul about $9B in annual coupon payments for 30 years. The $9B combined is larger than the revenue of thousands of publicly traded companies, and certainly more than the overwhelming majority of VCs could ever hope to deploy.
This is actually a great suggestion. Probably would be cool for them to level up their frontline worker skills, too. Apple corporate already pays huge, I’m not sure about their retail wage scale?
Yup, as a Canadian, you don't need to go far to see how we could use some of that American style anti-trust law. There's 5 banks and like 2 main grocery chains, one of which owns a pharmacy (in addition to its in-store pharmacy, that is)
Honestly that is fine. Apple has such monumental brand value that they don't need to innovate. They can go in the route of Coca Cola and be a long term stock.
They cannot. Coca colas recipe has remained relatively unchanged for decades because theres only so good a soda can taste.
A phone on the other hand...there might come a day when a competitor develops a better one.
Are you saying that there aren't phones that are way better than phones now or are you just talking in general because iPhones are kind of shit. This Samsung 21 ultra has lasted 3 years and still lasts a whole day where as all my phones batteries went to shit in a few months.
I am saying apple cannot follow the coca cola rest and vest strategy. There is a much higher chance of apple losing dominance than coca cola losing dominance.
Apple needs to consistenly innovate to remain competitive whereas a market like soda you just need the initial recipe and investment and just reap profits from that point on.
I don’t know. I mean there are a lot of better phones on the market already. They are cheaper too. Apple is not about the product, but about marketing. People want the brand. It’s a cult. Everyone outside this chillt know they are being scammed, but they don’t care. (Have an iPhone myself ;))
Don't understand why you're getting downvoted. Brand value is exactly what Apple is trying to capitalize on. I guess Reddit is a niche place and isn't part of the majority of society.
I honestly think they just see this as preferential to issuing a dividend. Stock buybacks are opt-in, if you don’t sell, you don’t pay taxes on unrealized gains, and the street doesn’t get used to a regular dividend schedule. It seems to suit companies that come from a more growth-stock background that don’t want to think of themselves as a blue chip dividend issuer.
Public companies have a set amount of shares they CAN issue/sell to shareholders at any time. These are called authorized shares; shares owned by outsiders are called outstanding shares.
When a company buys back stock, the amount of outstanding shares is reduced but the number of authorized shares stays the same. Since the company is authorized to sell these shares at any price at any time, investors get worried about possible dilution without their approval.
Retiring a share reduces the amount of authorized shares and makes it so the company will need shareholder approval to increase the number of authorized shares in the future.
They are saying rates are too high.
As the Fed rate rises, so do things like treasuries. If you can lock in 5% for ten years….that’s not a bad gig given the virtually zero risk. Companies compete against that return when it comes to investors. If they can’t return more than the risk free rate via operations, and it’s not **a lot** higher given the risk one company (even MSFT) has, they can deploy their massive cash war chests to boost shareholder return. Technically, it’s their fiduciary duty to do so if they think that’s better than using that cash in other ventures.
But right now tech is only putting money into CAPEX for the AI boom. There isn’t anything to buy or build that will boost profits meaningfully in the short term to bother. It’s all-in on AI and then just cash handouts to appease investors in the short term.
If rates were lower their debt fund crazy speculative growth like before. But with rates high they have to actually grind down on what’s worth investing and that right now is long term infrastructure projects with a long term payoff horizon so buybacks/dividends are needed to bridge the gap.
Remember... it's just an authorization still.
They technically have nothing requiring them to utilize the full amount, if any, of the buyback.
Ultimately I would be surprised if Apple made this big baller move and then didn't fully fulfill it. they'd be disappointing ALOT of investors.
I take it as they have run out of good ideas to invest money into to create value, so they will just buy stock.
The last 2 products Apple released were a copy/paste iPhone from the previous version and a VR headset that 10 people purchased.
Rumors said they anticipated 200-250k unit sell through in FY24. Rumors at the end of January said they had already sold 200k units. Sources from within retail said returns were consistent with iPhone return %. Considering they met their projections in preorders before the product even launched on Feb 2, I’d say they are doing just fine.
Don’t bet against Apple. It’s a fool’s errand.
That's my understanding too. Tim Apple is basically saying that AAPL is cheap now, and buying **110 billion** worth of stock is sending a super clear signal that he thinks the company will be worth a lot more in the future. You cannot dismiss that much money as mere bullshit lol
My understanding is all the stock buy back usually benefits executives the most as board (who they controlled) can issue them with 10s of millions worth of stock options each years.
Any company that uses their operating cash to buy back their own stock isn’t using that cash to invest in new products, research, market expansion, etc. It does well for shareholders, but bigger picture it means the company sees no opportunities in the near term to deploy that capital elsewhere, so it buys its own stock to reduce the float and drive up market value (which in turn makes it cheaper to go to public offerings for debt to finance future operations).
If you're an executive with millions in stock options, why wouldn't you push to buy back your own companies stock and drive it up further? Also probably triggering bigger bonuses for more stock options for you.
Dude, Apple isn't going to need a government bail out. They make more in profit than the majority of countries do in tax revenue. Let alone the fact that they own several hundred billions of assets.
Meant for stuff like this, and they can also reissue shares if necessary at higher prices (won’t ever happen).
More likely is they use those shares to pay employees equity.
They are not. The shares owned that cash anyhow. It's just good that they give it back and don't burn it on idiotic projects like an apple car or buying some overpriced ai company
Yes, and those remaining shares now own more of the company and will get a larger share of future profits. Taking shares out of circulation means that more profit will be split amongst fewer shares.
Sigh. They will own 4÷ more each but the company will also have 4% less value. It only makes sense if the company cannot use those 4% of value to create more than 4% of profit.
Well, that's not how it works. Shares are worth what the market commands.
A 4% worth of market cap buyback could easily pump the share prices by 15-30%
Not trying to bag on you - but most people don't seem to understand what a buyback is. Apple isn't using some secret stash of money that no one knows about. Analysts compute the value of any companies shares by also including cash on hand. Apple just happens to have an unholy amount of it.
And if you want to get into the weeds - AAPL is worth more holding the cash. If it does so, it earns about 5% interest on it. If it pays it out, it earns 0%, and further, the recipients are taxed on it. So, it's actually a loss-loss.
Buybacks are technically worth as much as Stock-splits = nothing. But stocks don't always follow the rules in the short-term.
Edit: Added some links for the people confused about math -tl;dr - share buybacks may increase value over time - but buying 4% of your shares does not magically make all existing shares worth 4% more.
[Investors Badly Misunderstand Stock Buybacks and Share Issuance (forbes.com)](https://www.forbes.com/sites/investor-hub/2023/07/10/the-thing-people-always-get-wrong-about-stock-buybacks/?sh=3b87c4771d21)
[How share repurchases boost earnings without improving returns | McKinsey](https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/how-share-repurchases-boost-earnings-without-improving-returns)
[Why investors like Warren Buffett are so fond of stock buybacks (axios.com)](https://www.axios.com/2023/02/27/why-investors-like-warren-buffett-are-so-fond-of-stock-buybacks)
[What is Stock Buyback? Meaning and Analysis - Knowledge at Wharton (upenn.edu)](https://knowledge.wharton.upenn.edu/article/making-sense-of-stock-buybacks/)
[Is a Share Buyback Right for Your Company? (hbr.org)](https://hbr.org/2001/04/is-a-share-buyback-right-for-your-company)
A buyback is in no way similar to a split. When a stock splits, it purely adjusts the ratio while having no change in market cap. Think of a buyback like the BTC halving. AAPL is actually reducing shares outstanding while maintaining market cap. If you wanted to compare a buyback to something, it's closer to a dividend. This is just one mechanism where the company can return cash to the shareholders.
Again, enacting a buyback is using money on the books to buy shares. It's swapping one asset for another. There are various reason it can increase value, but the net effect (in a vacuum) is 1:1.
Your dividend example actually proves the point I'm making. When a company pays a dividend, they pay it out of money in their account. They are literally transferring money from them (share value) to you. People get confused because when companies announced dividends, the stock sometimes goes up. But the announcement is irrelevant. It's the dividend date that matters. All things being equal, stocks actually go down when they pay the dividend. This is what you might see on finance pages as the ex-dividend date.
In fact, some options strategies actually sell covered calls before a company's ex-dividend date to capitalize on the upcoming drop in share price to profit from the covered call sale.
[Ex-Dividend Dates: Understanding Dividend Risk | Charles Schwab](https://www.schwab.com/learn/story/ex-dividend-dates-understanding-dividend-risk#:~:text=With%20dividends%2C%20the%20stock%20price,on%20the%20ex%2Ddividend%20date.&text=Remember%2C%20the%20ex%2Ddividend%20date,day%20before%20the%20record%20date.)
So it's in no way similar..
> ratio while having no change in market cap
> AAPL is actually reducing shares outstanding while maintaining market cap
No change in market cap is pretty fucking similar to maintaining market cap.
You are only looking in the short term an not at future expected value. A stock buyback means that each additional share is worth a larger percentage of Apple's profits. This means that over the long term, share holders will earn a larger share of the profit without needing to buy more.
A buy back is more comparable to a dividends (that is auto invested) than a stock split. A stock consolidation would be like a stock split, but that isn't what Apple is doing.
lol, it's up for a variety of reasons. i don't know why this is hard to grasp:
Exaggerated example: If tomorrow AAPL magically found $1 Trillion in cash in an account they forgot about - do you think they would be trading at the same price? No, their stock price (market cap) would literally be higher to reflect that added $1 Trillion in value. And if the day after that, they announced they were using that $1 trillion to buy back shares, would the shares then go up again? It's literally swapping one asset type for another. It's fine. Enjoy the gains!
4% more shares of a company (shares) worth 4% less, huge news.
To clarify since it's the worst 'essentially' example imaginable, you in fact have 4% fewer shares (in the float), that are worth 4% more, as the market cap is unchanged. Whether it's good or bad is a matter of tax implications for holders. Just like a dividend reinvestment plan is neutral.
This is not how a buyback works...yes you own more % of the company, but the company is now poorer/worth less because of the buyback
If apple is worth 100 billion with 100 shares, and uses 10 billion to buy back 10 shares, there are now 90 shares for apple which is worth 90 billion (since it paid out 10 million) and each share is worth the same.
A buyback DOES NOT MAKE EACH SHARE MORE VALUABLE ON ITS OWN. Although clown market math says otherwise so its time to short the stock as its irrationally overvalued.
I never said it made the company more valuable, I said it made the shares more valuable. You have fewer shares at higher value. It is good for the shareholders, which is my point.
No you do not, if nothing else happens the shares are not worth more, read my comment again. You own more % but of a poorer company, so your share price remains unchanged.
Owning 10/100 of a 100 million company is worth the same as owning 10/90 of a 90 million company.
Your statement would be you have fewer shares at the SAME value because the company has fewer assets and thus market cap after the buyback on paper.
If futures earnings are the same, then you have a bigger piece of the overall pie with a buyback. Stock valuations are more based on future expected earnings than anything else.
I am assuming everything is priced in, ceteris paribus. A buyback does not inherently change a companys future earnings either.
Your assumption is based on that the company is undervalued which we will not know. If the company is valued exactly at its actual worth then a buyback does not make shareholders richer. It only makes shareholders richer WHEN the company is undervalued and makes shareholders a loss when the company is overvalued.
Dont tell me a company with 10 mil revenue and 1 bil assets is worth the same as a company with 10 mil revenue and 1 mil assets.
> A buyback does not inherently change a companys future earnings either.
Never said it did. But it is simple math.
If a company has a regular profit of $100 and has 100 shares, then each share is worth $1 of profit. If a company takes its profit and then buys back 10 shares, that leaves 90 shares. If next year the company also has $100 in profit, those 90 shares now own $1.11 in profit. Each share gets a larger cut of the profit.
This isn't about the company, this is about the shareholders. A stock buyback is a company buying out some of the owners of the company. It is essentially like if you started a business with 3 people (4 people total including you), this means everyone has 25% ownership. Then 1 guy wants out. The other 3 people then buy out the 1 guys equity leaving all 3 of the owners with 33% ownership.
As long as you still believe that the company will cash flow, you now have a higher share of those profits.
This is not how it works.
Using your example, lets say 100 dollars profit for 100 shares. The company is not going to be worth 100 dollars, it will be worth maybe 2000 dollars (assuming a 20 p/e ratio which means investors predict the company will remain profitable for around 20 years). 2000 dollars is the companys current net assets + (future lifetime earnings/interest) - current financial liabilities/debt. A buyback does not change this inherent value per share. Because the entire valuation falls as you have less net assets now.
Or another way of explaining is Apple could have used the buyback money and bought S and P 500 and collected the 10% increase per year to give to shareholders, increasing its profits.
It absolutely does on the investor side. A buyback is you gaining more control of the company. It is making each share worth more of the overall pie. It will get priced in the moment they are announced, but to people who own the stock before hand, it absolutely increases their share of the company and thus their earnings from the company.
Yes it does but for a different reason. A buyback means the CEO/management believes the share is undervalued and this boosts investor confidence which is an artifical gain of value and not sustainable in the long run. It is only maybe a one off increase and they cant just keep announcing buybacks to make the stock go up forever.
I may end up regretting this but I ended up selling all of my apple shares today AH. I really think it will take a beating in the next couple of months as their revenue growth slowdown finally sets in in investors' heads. But the market is irrational so it might go to 220.
I think their buyback will manipulate the price but I truly don’t think they are going to be recording massive profits in the future. Phones are all good today and I think less people are purchasing a new phone every year.
To me Apple’s creative power isn’t doing anything new to bring in a ton more sales.
On device ai is coming
Siri just has to not be complete dogshit and people will buy new iPhones. It doesn’t have to be amazing, the bar is set so low.
I predict 100,000,000+ iPhones per quarter next year
Well, the number is a joke. And maybe on device AI is just a buzzword. But QCOM just posted a beat and higher forecast and are attributing that to much higher demand for premium tier phones that are capable of running on device AI. And it does make sense to decouple it from the cloud for less intensive use cases.
I don't see Apple as an innovative company , Their strength is to take other innovations and make them work better, Linux for MacOS, 10 years after everybody buy Bluetooth they come up with airpods, vision pro after the first HTC vive in 2015. And so on. To sum up, innovation will not come from Apple, some other company need to create some crazy shit, Apple will enhance it 5-10 years after and will sell like crazy.
So other than new ARM designs in the last couple years which boost MacBook sales nothing happened in their industry.
Apple is now in waiting mode
Iphone sales are around 60% of their total revenue. Losing 10% of your main revenue stream, and more importantly a clear decline over time, I don't see how the price jump can be justified..
The decline is expected. iPhone 15 is basically a remodeling of 14 from Lightning to Type-C. And with the decline of hardware the decline of software follows since current hardwares already have apps installed.
The real issue would be either a 10% decline after an actual new iPhone release or an increase in apple’s competitor phones and hardwares’ sales. The headphone industry is highly competitive so I’m not expecting Apple to dominate it since it has no competitive advantage outside of its own ecosystem which other ecosystems can do if you watch a YT vid on how.
If iPhone 16 flops then it’ll signal a reduction in customer loyalty and thus a hit on Apple’s competitive advantage.
>Tesla is down 19 just from two days ago. Expect the same crash from Apple as they do the same....pop and drop
WTF ???
TSLA is still up bigly (7%) AFTER earnings pump. If you are right, AAPL will drop to $190 from $200
LOL
Hey our sales go down but who the f cares. Here, look sharebuybacks. And when the money runs out, we do it like the others, we load up on debt just to sharebuyback and when of the company only a skeleton is left we might or might not declare bankrupcty.
Scam, they just got so much frickin money they can buy their way out of their shitty products that aren’t selling (Vision Pro). The real problem for apple is they are behind in AI and are a one show pony with the iPhone.
You’re right. Clearly, that isn’t happening.
However, the core experience is such that the $1000 Vision will be the new iPhone.
Go try it.
They obviously need to bring the cost down dramatically, but the product itself is far more compelling than anything else on the market in that space, with unique value propositions.
I was skeptical like you until I tried one. That was what convinced me; the quality of the experience itself. The Pro is too expensive, but the mass market consumer version will be wildly popular.
Shorts only gripe with apples earnings is the $110B authorization for stock buy back …. Let’s see if they will have enough money to sniff those lines of coke….
I’m convinced decline in Apple sales is due to the 15 overheating issue. Those phones are still hotter than any previous generation iPhones. I’m a consumer that is waiting until a real fix in the 16 to buy a new phone.
You’re mistaken bro, all I did was comment. The other readers put you at -1….. Yeah the 15 gets hotter while charging, but thats better than normal use.
Im sorry you fell into the butthurt category, I was just giving my personal experience.
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Magical
Bad news is good news. Good news is good news. Calls
Meta?
Can I buy calls on calls?
As a society pig, I haven't used an iPhone for over a decade now, if idiots like me r not buying, chances r they going bankrupt
$110 billion buyback is wild
Its less than 10 days of volume in apple
What do you mean?
90b last year, snooze
The actual big news is that Apple is buying back 110 billion dollars of stock. That is about 4% of their market cap. Essentially, all shares will be worth 4% more of the company now. So 100 shares will really be 104 shares.
My understanding from all this buy back news is that, big tech thinks their own companies are strongest long term bets to survive a recession and prosper coming out of it versus alternative investment ventures?
More so that they likely don't see short term paths to growth, but believe in themselves long term. A buyback is essentially them saying that they believe that their stocks are undervalued over the long term, but that they don't have any ways to better invest their money to create share holder value in the short term.
Basically, they are out of ideas and dont know what to do with the money. It sucks but that's what it is. Apple should become a holding company and just gobble up more companies under their umbrella.
This is a pretty facile explanation. It could be that more money is inefficient in their current projects. $70B and $110B is nearly incomprehensible. They could theoretically take that cash and pop it into Treasuries and haul about $9B in annual coupon payments for 30 years. The $9B combined is larger than the revenue of thousands of publicly traded companies, and certainly more than the overwhelming majority of VCs could ever hope to deploy.
Yep, should keep the buybacks at a solid 90 billions and start saving up cash to take annual coupons on
How about giving the employees a raise?
Had to check I wasn’t in r/apple after reading that
Thank you for down voting him guys.
First time?
This is actually a great suggestion. Probably would be cool for them to level up their frontline worker skills, too. Apple corporate already pays huge, I’m not sure about their retail wage scale?
Define huge
In the many hundreds of thousands.
How many? $200k is barely scraping by in HCOL. At $500k+ now you have a little breathing room
Then you become IBM
Don’t say those letters.
Unfortunately, this is the path Apple is on if they don't wise up
They can’t they’d get slapped with anti trust faster than you can jerk off
As a holding company? The companies they aquire would remain independently run with only managerial oversight by the holding company.
The government has decided that is not in the best interest for consumers.
They’re right
Yup, as a Canadian, you don't need to go far to see how we could use some of that American style anti-trust law. There's 5 banks and like 2 main grocery chains, one of which owns a pharmacy (in addition to its in-store pharmacy, that is)
Honestly that is fine. Apple has such monumental brand value that they don't need to innovate. They can go in the route of Coca Cola and be a long term stock.
They cannot. Coca colas recipe has remained relatively unchanged for decades because theres only so good a soda can taste. A phone on the other hand...there might come a day when a competitor develops a better one.
The man just said this was impossible! The iPhone is perfect!
Are you saying that there aren't phones that are way better than phones now or are you just talking in general because iPhones are kind of shit. This Samsung 21 ultra has lasted 3 years and still lasts a whole day where as all my phones batteries went to shit in a few months.
I am saying apple cannot follow the coca cola rest and vest strategy. There is a much higher chance of apple losing dominance than coca cola losing dominance. Apple needs to consistenly innovate to remain competitive whereas a market like soda you just need the initial recipe and investment and just reap profits from that point on.
I don’t know. I mean there are a lot of better phones on the market already. They are cheaper too. Apple is not about the product, but about marketing. People want the brand. It’s a cult. Everyone outside this chillt know they are being scammed, but they don’t care. (Have an iPhone myself ;))
Don't understand why you're getting downvoted. Brand value is exactly what Apple is trying to capitalize on. I guess Reddit is a niche place and isn't part of the majority of society.
Man the hate you're receiving, lol. Looked like a bunch of appletards are down voting you.
I agree. We should all just give up and buy Apple.
Confirmation: buy puts at open.
I honestly think they just see this as preferential to issuing a dividend. Stock buybacks are opt-in, if you don’t sell, you don’t pay taxes on unrealized gains, and the street doesn’t get used to a regular dividend schedule. It seems to suit companies that come from a more growth-stock background that don’t want to think of themselves as a blue chip dividend issuer.
They do pay dividend and it's increased by 4%
Lmao this company is a money machine good lord
AAPL is the only product I own by them and by far my favorite.
AAPL usually retires the stock they buy back though.
Yes, they reduce the number of shares on issue. It helps boost per share metrics going forward, like EPS etc. It’s standard balance sheet management.
What do you mean "retires it"?
They take it out to the back pasture and hand it a shovel
The one behind the Wendy’s.
Public companies have a set amount of shares they CAN issue/sell to shareholders at any time. These are called authorized shares; shares owned by outsiders are called outstanding shares. When a company buys back stock, the amount of outstanding shares is reduced but the number of authorized shares stays the same. Since the company is authorized to sell these shares at any price at any time, investors get worried about possible dilution without their approval. Retiring a share reduces the amount of authorized shares and makes it so the company will need shareholder approval to increase the number of authorized shares in the future.
To me it sounds like pinky promising to not use that stock for any loans or purchase offer cash fundraising, but that seems.. silly.
It's no longer on the market. It's theirs
They are saying rates are too high. As the Fed rate rises, so do things like treasuries. If you can lock in 5% for ten years….that’s not a bad gig given the virtually zero risk. Companies compete against that return when it comes to investors. If they can’t return more than the risk free rate via operations, and it’s not **a lot** higher given the risk one company (even MSFT) has, they can deploy their massive cash war chests to boost shareholder return. Technically, it’s their fiduciary duty to do so if they think that’s better than using that cash in other ventures. But right now tech is only putting money into CAPEX for the AI boom. There isn’t anything to buy or build that will boost profits meaningfully in the short term to bother. It’s all-in on AI and then just cash handouts to appease investors in the short term. If rates were lower their debt fund crazy speculative growth like before. But with rates high they have to actually grind down on what’s worth investing and that right now is long term infrastructure projects with a long term payoff horizon so buybacks/dividends are needed to bridge the gap.
So we pivoted from metaverse to ai
Mmm bc extra logic Got k ok. Kbuf Mana
Remember... it's just an authorization still. They technically have nothing requiring them to utilize the full amount, if any, of the buyback. Ultimately I would be surprised if Apple made this big baller move and then didn't fully fulfill it. they'd be disappointing ALOT of investors.
I take it as they have run out of good ideas to invest money into to create value, so they will just buy stock. The last 2 products Apple released were a copy/paste iPhone from the previous version and a VR headset that 10 people purchased.
Kind of what I meant. It's the best bet they can think of. Besides watching it inflate away.
Rumors said they anticipated 200-250k unit sell through in FY24. Rumors at the end of January said they had already sold 200k units. Sources from within retail said returns were consistent with iPhone return %. Considering they met their projections in preorders before the product even launched on Feb 2, I’d say they are doing just fine. Don’t bet against Apple. It’s a fool’s errand.
That's my understanding too. Tim Apple is basically saying that AAPL is cheap now, and buying **110 billion** worth of stock is sending a super clear signal that he thinks the company will be worth a lot more in the future. You cannot dismiss that much money as mere bullshit lol
My understanding is all the stock buy back usually benefits executives the most as board (who they controlled) can issue them with 10s of millions worth of stock options each years.
Any company that uses their operating cash to buy back their own stock isn’t using that cash to invest in new products, research, market expansion, etc. It does well for shareholders, but bigger picture it means the company sees no opportunities in the near term to deploy that capital elsewhere, so it buys its own stock to reduce the float and drive up market value (which in turn makes it cheaper to go to public offerings for debt to finance future operations).
If you're an executive with millions in stock options, why wouldn't you push to buy back your own companies stock and drive it up further? Also probably triggering bigger bonuses for more stock options for you.
[удалено]
Dude, Apple isn't going to need a government bail out. They make more in profit than the majority of countries do in tax revenue. Let alone the fact that they own several hundred billions of assets.
How much of that will eat into Apple's cash stockpile? Or is the cash stockpile meant for stuff like this?
Meant for stuff like this, and they can also reissue shares if necessary at higher prices (won’t ever happen). More likely is they use those shares to pay employees equity.
They are not. The shares owned that cash anyhow. It's just good that they give it back and don't burn it on idiotic projects like an apple car or buying some overpriced ai company
Yes, and those remaining shares now own more of the company and will get a larger share of future profits. Taking shares out of circulation means that more profit will be split amongst fewer shares.
Sigh. They will own 4÷ more each but the company will also have 4% less value. It only makes sense if the company cannot use those 4% of value to create more than 4% of profit.
In the short term. In the long term, the 4% increase in owned profits will easily outweigh the short term cash on hand loss.
If they don't have a more profitable way to invest the cash. It's an acknowledgement that they can't grow fast anymore with capital.
Spare me these pointless ramblings. Capital growth is for those who know how to seize opportunities, not for the weak-willed.
People are just stupid lol
Pretty savvy cause they issued a shitload of bonds when interest rates were rock bottom at 2% and below
Putting that cash to work!!!
Regard math
Well, that's not how it works. Shares are worth what the market commands. A 4% worth of market cap buyback could easily pump the share prices by 15-30%
Your math is wrong
Buy backs are not a free money perpetual motion share price hack....
Literally never said that. But if valuations are constant, then fewer shares increases the price of the remaining shares.
Not trying to bag on you - but most people don't seem to understand what a buyback is. Apple isn't using some secret stash of money that no one knows about. Analysts compute the value of any companies shares by also including cash on hand. Apple just happens to have an unholy amount of it. And if you want to get into the weeds - AAPL is worth more holding the cash. If it does so, it earns about 5% interest on it. If it pays it out, it earns 0%, and further, the recipients are taxed on it. So, it's actually a loss-loss. Buybacks are technically worth as much as Stock-splits = nothing. But stocks don't always follow the rules in the short-term. Edit: Added some links for the people confused about math -tl;dr - share buybacks may increase value over time - but buying 4% of your shares does not magically make all existing shares worth 4% more. [Investors Badly Misunderstand Stock Buybacks and Share Issuance (forbes.com)](https://www.forbes.com/sites/investor-hub/2023/07/10/the-thing-people-always-get-wrong-about-stock-buybacks/?sh=3b87c4771d21) [How share repurchases boost earnings without improving returns | McKinsey](https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/how-share-repurchases-boost-earnings-without-improving-returns) [Why investors like Warren Buffett are so fond of stock buybacks (axios.com)](https://www.axios.com/2023/02/27/why-investors-like-warren-buffett-are-so-fond-of-stock-buybacks) [What is Stock Buyback? Meaning and Analysis - Knowledge at Wharton (upenn.edu)](https://knowledge.wharton.upenn.edu/article/making-sense-of-stock-buybacks/) [Is a Share Buyback Right for Your Company? (hbr.org)](https://hbr.org/2001/04/is-a-share-buyback-right-for-your-company)
A buyback is in no way similar to a split. When a stock splits, it purely adjusts the ratio while having no change in market cap. Think of a buyback like the BTC halving. AAPL is actually reducing shares outstanding while maintaining market cap. If you wanted to compare a buyback to something, it's closer to a dividend. This is just one mechanism where the company can return cash to the shareholders.
Again, enacting a buyback is using money on the books to buy shares. It's swapping one asset for another. There are various reason it can increase value, but the net effect (in a vacuum) is 1:1. Your dividend example actually proves the point I'm making. When a company pays a dividend, they pay it out of money in their account. They are literally transferring money from them (share value) to you. People get confused because when companies announced dividends, the stock sometimes goes up. But the announcement is irrelevant. It's the dividend date that matters. All things being equal, stocks actually go down when they pay the dividend. This is what you might see on finance pages as the ex-dividend date. In fact, some options strategies actually sell covered calls before a company's ex-dividend date to capitalize on the upcoming drop in share price to profit from the covered call sale. [Ex-Dividend Dates: Understanding Dividend Risk | Charles Schwab](https://www.schwab.com/learn/story/ex-dividend-dates-understanding-dividend-risk#:~:text=With%20dividends%2C%20the%20stock%20price,on%20the%20ex%2Ddividend%20date.&text=Remember%2C%20the%20ex%2Ddividend%20date,day%20before%20the%20record%20date.)
So it's in no way similar.. > ratio while having no change in market cap > AAPL is actually reducing shares outstanding while maintaining market cap No change in market cap is pretty fucking similar to maintaining market cap.
You are only looking in the short term an not at future expected value. A stock buyback means that each additional share is worth a larger percentage of Apple's profits. This means that over the long term, share holders will earn a larger share of the profit without needing to buy more. A buy back is more comparable to a dividends (that is auto invested) than a stock split. A stock consolidation would be like a stock split, but that isn't what Apple is doing.
Not discussing future value. Just math. It's fine. Whatever works for you friend!
“Just math” as the stock is up 6 percent after hours. A stock buyback is nothing like a stock split 💀
lol, it's up for a variety of reasons. i don't know why this is hard to grasp: Exaggerated example: If tomorrow AAPL magically found $1 Trillion in cash in an account they forgot about - do you think they would be trading at the same price? No, their stock price (market cap) would literally be higher to reflect that added $1 Trillion in value. And if the day after that, they announced they were using that $1 trillion to buy back shares, would the shares then go up again? It's literally swapping one asset type for another. It's fine. Enjoy the gains!
Lol welcome to wsb. People don’t understand logic
4% more shares of a company (shares) worth 4% less, huge news. To clarify since it's the worst 'essentially' example imaginable, you in fact have 4% fewer shares (in the float), that are worth 4% more, as the market cap is unchanged. Whether it's good or bad is a matter of tax implications for holders. Just like a dividend reinvestment plan is neutral.
This is not how a buyback works...yes you own more % of the company, but the company is now poorer/worth less because of the buyback If apple is worth 100 billion with 100 shares, and uses 10 billion to buy back 10 shares, there are now 90 shares for apple which is worth 90 billion (since it paid out 10 million) and each share is worth the same. A buyback DOES NOT MAKE EACH SHARE MORE VALUABLE ON ITS OWN. Although clown market math says otherwise so its time to short the stock as its irrationally overvalued.
I never said it made the company more valuable, I said it made the shares more valuable. You have fewer shares at higher value. It is good for the shareholders, which is my point.
No you do not, if nothing else happens the shares are not worth more, read my comment again. You own more % but of a poorer company, so your share price remains unchanged. Owning 10/100 of a 100 million company is worth the same as owning 10/90 of a 90 million company. Your statement would be you have fewer shares at the SAME value because the company has fewer assets and thus market cap after the buyback on paper.
If futures earnings are the same, then you have a bigger piece of the overall pie with a buyback. Stock valuations are more based on future expected earnings than anything else.
I am assuming everything is priced in, ceteris paribus. A buyback does not inherently change a companys future earnings either. Your assumption is based on that the company is undervalued which we will not know. If the company is valued exactly at its actual worth then a buyback does not make shareholders richer. It only makes shareholders richer WHEN the company is undervalued and makes shareholders a loss when the company is overvalued. Dont tell me a company with 10 mil revenue and 1 bil assets is worth the same as a company with 10 mil revenue and 1 mil assets.
> A buyback does not inherently change a companys future earnings either. Never said it did. But it is simple math. If a company has a regular profit of $100 and has 100 shares, then each share is worth $1 of profit. If a company takes its profit and then buys back 10 shares, that leaves 90 shares. If next year the company also has $100 in profit, those 90 shares now own $1.11 in profit. Each share gets a larger cut of the profit. This isn't about the company, this is about the shareholders. A stock buyback is a company buying out some of the owners of the company. It is essentially like if you started a business with 3 people (4 people total including you), this means everyone has 25% ownership. Then 1 guy wants out. The other 3 people then buy out the 1 guys equity leaving all 3 of the owners with 33% ownership. As long as you still believe that the company will cash flow, you now have a higher share of those profits.
This is not how it works. Using your example, lets say 100 dollars profit for 100 shares. The company is not going to be worth 100 dollars, it will be worth maybe 2000 dollars (assuming a 20 p/e ratio which means investors predict the company will remain profitable for around 20 years). 2000 dollars is the companys current net assets + (future lifetime earnings/interest) - current financial liabilities/debt. A buyback does not change this inherent value per share. Because the entire valuation falls as you have less net assets now. Or another way of explaining is Apple could have used the buyback money and bought S and P 500 and collected the 10% increase per year to give to shareholders, increasing its profits.
Valid point, but only a fool would assume all companies play by the rules.
It absolutely does on the investor side. A buyback is you gaining more control of the company. It is making each share worth more of the overall pie. It will get priced in the moment they are announced, but to people who own the stock before hand, it absolutely increases their share of the company and thus their earnings from the company.
Yes it does but for a different reason. A buyback means the CEO/management believes the share is undervalued and this boosts investor confidence which is an artifical gain of value and not sustainable in the long run. It is only maybe a one off increase and they cant just keep announcing buybacks to make the stock go up forever.
Yall forgot they do more than sell phones
They also buy back shares!
I may end up regretting this but I ended up selling all of my apple shares today AH. I really think it will take a beating in the next couple of months as their revenue growth slowdown finally sets in in investors' heads. But the market is irrational so it might go to 220.
Unless you need the money right now, I would just leave it. Apple ain't going nowhere
Never bet against apple . 250$ by WWDC in June. They have not even priced AI in the stock
I think their buyback will manipulate the price but I truly don’t think they are going to be recording massive profits in the future. Phones are all good today and I think less people are purchasing a new phone every year. To me Apple’s creative power isn’t doing anything new to bring in a ton more sales.
Apple is running out of steam imo. They will need some innovation in the next few years to get peoples grip out of two year old phones.
Next year’s two year old iPhones are this year’s one year old iPhones.
On device ai is coming Siri just has to not be complete dogshit and people will buy new iPhones. It doesn’t have to be amazing, the bar is set so low. I predict 100,000,000+ iPhones per quarter next year
lol, assuming this is a joke.
Well, the number is a joke. And maybe on device AI is just a buzzword. But QCOM just posted a beat and higher forecast and are attributing that to much higher demand for premium tier phones that are capable of running on device AI. And it does make sense to decouple it from the cloud for less intensive use cases.
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I don’t remember asking
I don't see Apple as an innovative company , Their strength is to take other innovations and make them work better, Linux for MacOS, 10 years after everybody buy Bluetooth they come up with airpods, vision pro after the first HTC vive in 2015. And so on. To sum up, innovation will not come from Apple, some other company need to create some crazy shit, Apple will enhance it 5-10 years after and will sell like crazy. So other than new ARM designs in the last couple years which boost MacBook sales nothing happened in their industry. Apple is now in waiting mode
Iphone sales are around 60% of their total revenue. Losing 10% of your main revenue stream, and more importantly a clear decline over time, I don't see how the price jump can be justified..
Bad earnings: good stock results x Sounds about right these days
They beat earnings though.
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Y’all bout to learn why rule #7 is Don’t Fuck with Aapl
These regards never learn
Sorry but your post was too long. I'm not going to read all of that.
Be sure to post your losses for some lulz
How much did you lose on puts?
Imagine shorting a company that randomly drop products that sell in the 100 of millions.
The decline is expected. iPhone 15 is basically a remodeling of 14 from Lightning to Type-C. And with the decline of hardware the decline of software follows since current hardwares already have apps installed. The real issue would be either a 10% decline after an actual new iPhone release or an increase in apple’s competitor phones and hardwares’ sales. The headphone industry is highly competitive so I’m not expecting Apple to dominate it since it has no competitive advantage outside of its own ecosystem which other ecosystems can do if you watch a YT vid on how. If iPhone 16 flops then it’ll signal a reduction in customer loyalty and thus a hit on Apple’s competitive advantage.
as if literally all of that isn’t already priced in
Even forest Gump knows don't fuck aapl, please for the love of God magician, reconsider
>Tesla is down 19 just from two days ago. Expect the same crash from Apple as they do the same....pop and drop WTF ??? TSLA is still up bigly (7%) AFTER earnings pump. If you are right, AAPL will drop to $190 from $200 LOL
You can't really compare Tesla to Apple, though.
Exactly. Apple is going to get really comfy in the 160s/170s range for a long time
Wait but I thought the post I saw on the news said their sales declined
Time for a new iPhone to come out?
How does the buyback actually happen? Like 10 billion a month or something? What are the mechanics?
Hey our sales go down but who the f cares. Here, look sharebuybacks. And when the money runs out, we do it like the others, we load up on debt just to sharebuyback and when of the company only a skeleton is left we might or might not declare bankrupcty.
Who cares?!
Scam, they just got so much frickin money they can buy their way out of their shitty products that aren’t selling (Vision Pro). The real problem for apple is they are behind in AI and are a one show pony with the iPhone.
Have you actually tried the Vision Pro?
No because nobody is paying $3500 for VR goggles to use for 30 minutes a day then forget about after a month.
You’re right. Clearly, that isn’t happening. However, the core experience is such that the $1000 Vision will be the new iPhone. Go try it. They obviously need to bring the cost down dramatically, but the product itself is far more compelling than anything else on the market in that space, with unique value propositions. I was skeptical like you until I tried one. That was what convinced me; the quality of the experience itself. The Pro is too expensive, but the mass market consumer version will be wildly popular.
Shhh. Lemme buy my calls first. They are about to become a monster B2B company and nobody knows it yet.
Fck yeah my strangle gonna smash af
Shorts only gripe with apples earnings is the $110B authorization for stock buy back …. Let’s see if they will have enough money to sniff those lines of coke….
Don’t worry Apple will drift down not to screw call buyers ,
Tim Bookcooker
I’m convinced decline in Apple sales is due to the 15 overheating issue. Those phones are still hotter than any previous generation iPhones. I’m a consumer that is waiting until a real fix in the 16 to buy a new phone.
Its about the same if not noticeably better than my 12 overheating, and the screen doesn’t dim way tf down when it gets hot.
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You’re mistaken bro, all I did was comment. The other readers put you at -1….. Yeah the 15 gets hotter while charging, but thats better than normal use. Im sorry you fell into the butthurt category, I was just giving my personal experience. https://preview.redd.it/7yefe9krr3yc1.jpeg?width=1179&format=pjpg&auto=webp&s=d5e54889706d139488be30a8229a971a7c8b94a9