Panicked selling of AAPL lets Apple execute buybacks cheaply

Quite an impressive display of panic in the stock market this week has afforded Apple a golden opportunity to execute billions of dollars in buybacks, should the company so choose.

Panicked selling of AAPL lets Apple execute buybacks cheaply“Media-induced panic related to the coronavirus outbreak has caused stocks to crash in value, with Apple’s share price dropping to levels not seen since early December, back before it was appreciated how well Apple’s iPhone 11, wearables, services, and other offerings had performed during holiday sales,” Daniel Eran Dilger for AppleInsider:

Apple’s quick action to buy back billions of its shares at a discount after irrational stock dips have repeatedly occurred over the past decade. In both 2013 and 2014 the company scrambled to buy double-digit billions worth of Apple stock after tech media sources repeatedly depicted its record sales as “disappointing.”

That history continued into the most recent holiday quarter, when Apple’s chief financial officer Luca Maestri detailed efforts to buy up tens of millions of shares at an average price of $250 before those shares began climbing north of $325 this month.

Apple wasn’t driven up into a bubble valuation. Even at its peak, its price to earnings ratio was far smaller than Google, Microsoft, Amazon, or other peers in technology. So the massive drop in Apple hasn’t been the result of a rational reevaluation of Apple’s value. It’s just yet another media-induced panic that allows Apple the opportunity to further concentrate the value of its share via stock buybacks.

MacDailyNews Take: Spot on. Enough with the media-induced FUD, already! (Just, first, can we get a sub-$250 dive, pretty please?)

Be fearful when others are greedy. Be greedy when others are fearful. — Warren Buffett

13 Comments

  1. I’m glad the gutless investors are getting bought out by Apple. Who in their right mind dumps stock because of a flu virus? As though dumping stock is going to change anything. Better to just go out and buy some disinfectant or even order it online.

    1. A lot of this weeks selling was either (1) portfolio managers recognizing gains while they can in order to offset other losses or (2) some forced margin selling, since margin balances were at an all-time high

      1. I always seem to forget about buying stocks on margin as I’ve never done such a thing. That could easily lead people to panic. That’s too risky for me. I only buy what I can actually afford to lose or something to that effect. Even if I did buy stock on margin, I would have to make sure I have the money to cover, just in case.

        Margin balances were at an all-time high? People are simply too greedy thinking the market will only go up. I just felt there would be some nasty market event coming that would hit Apple hard because things were just going along too well for the stock. Apple is still in a much better position than Boeing as they’ve been hit especially hard for so many reasons.

  2. Added 11 shares this afternoon at $268 (and wish I could have purchased a lot more). APPL is well-positioned to return to to it’s pre-Coronovirus price and upper 300s once this passes. Might take some time, but it eventually will. And those who panic are the ones who end up losing.

    1. Completely agree. The corporate trickle down isn’t working. Every dollar that Apple hoards is that much less that gets circulated around Main Street. Apple could be building factories and hiring people on every continent, but obviously Timmy doesn’t care. He’s busy trying to maximize his stock bonus.

      Apple like many US corporations has only made themselves highly dependent on Communist China for their existence. Imagine how little the impact would be if Apple had 5 smaller geographically diversified plants around the world assembling iPhones instead of parking everything in China.

      Apple should stop borrowing money from Wall Street as well. It took out low-interest loans in order to buy back its own stock, claiming that it was profitable to do so. That’s hogwash. Its money is better spent making new hardware and software that has historically been sold with >25% profit margins. Of course, Apple would make tons more money if it sold more units and only demanded a tax (profit) rate of 20%, but of course other folks will say the opposite. We’ll never know because the last year of stock buybacks just got erased in a week of correction.

      1. The buybacks have retired a third of outstanding shares overall. Whatever way you look at it, those who hold Apple shares own 50% more of the company than they would have without buybacks.
        Whether the buybacks have increase share value is a good question. Maybe the real question is what would they have with that cash (~250BB) otherwise. Dividends possibly but unlikely at that level. Throwing cash at products would be a recipe for disaster.

        1. Suuuure. Like there’s no correlation between Apple’s hardware releases and the profits. Apple would earn a much better rate or return with more hardware updates in more markets. Apple only makes about 50 products, most of those accessories. That is not a diverse base.

      2. iPads sales picked 2 years ago when Apple started making better faster better iPads, Macs would do the same if Apple moved away from Intel and put many of the hardware features from the iPad and iPhones into Macs.

  3. Here’s a handy little factoid for the Con Don lovers:

    DJIA from inauguration through February 28 of the 4th year in office:

    Con Don’s pump and bust : +28%

    Obama’s slow and steady recovery : +63%

    Bothell were aided by massive deficit spending, only one of them faced an emergency recession the second he entered office.

    Just keep that in mind while you hear Con Don blame everything on the virus for the next 8 months. Then we can fire his orange fat ass.

    1. interesting, and this doesn’t count the last week of market plunges.

      Donny was always the bigliest pumper and dump’her in NY. stocks, ego, and otherwise.

      inherited growing economy, now in 3.2 years, no lasting market gains. what a legacy.

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