Apple continues to dominate stock buybacks with a massive $20.449 billion in share repurchases in the third quarter alone.
Brian Sozzi for Yahoo Finance:
About 53.8% of third quarter stock buyback activity was fueled by the top 20 companies, according to new data from S&P Dow Jones Indices senior index analyst Howard Silverblatt. The top 20 list was headlined by a who’s who of the rich and powerful in corporate America: Apple, Alphabet, Meta, Oracle and Microsoft.
“Apple continued to be the poster child for buybacks as it again spent the most of any issue, with the Q3 2021 expenditure ranked eighth highest in S&P history,” said Silverblatt.
The aggressive buying of stock by companies — which has the effect of lowering share counts and juicing earnings per share —in the third quarter was noteworthy beyond the 20 largest companies listed by Silverblatt.
Third quarter buybacks among S&P 500 companies tallied $234.6 billion, up 18% from the second quarter and 130.5% from one year ago. For the 12-months ended September 2021, buybacks totaled $742.2 billion — up 21.8% year-over-year.
MacDailyNews Take: In distant second place was Alphabet Inc. with $15.033 billion spent on buybacks. In 12 months thru September 2021, Apple spent a whopping $92.527 billion on buybacks compared to distant No.2 Meta (Facebook) with $44.705 billion.
For perspective, the market value of Mercedes-maker Daimler is $74.554 billion.
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MacDailyNews is on the upside of Apple stock like no other Apple product news sites. Kudos to you for that, trying to help the average person. I have also commented on some of the articles encouraging people to understand that Apple stock is a particularly low risk way to gain financial strength. There is no excuse for the many people reading these articles and comments not to understand the ability to take your hard earned money and put it to work for you.
Unfortunately in comments (and some ratings to my comments) people down vote it. One can only lead horse to water, you can’t make them drink. Companies like Apple (and a few others) only come along once on a great while. And stock buy back is just icing on the cake, another example of this stock taking your money and making it into more for you.
For people who don’t understand this buyback concept. You and 3 other people own a company worth 1 million dollars. So each owner has 250,000 dollar ownership. However, the company makes so much money it decides to buy out one owner for 250,000 — just eliminating that ownership stake in the company. Now their are 3 owners of this million dollar company. Do the math, each owner now has 333,000 of ownership in the company. See how that works?
Unless you think Market Cap does not include the money used to buy out the hypothetical owner, the actual valuation has been reduced by the amount paid out to that owner. Recovering the market cap to it’s prior state is when the stock responds to reach a higher price due to the ‘demand’ created by the buyout that will compensate for the amount paid out. So when the buy out of that owner settles, the initial Marketcap is actually closer to $750K than $1M.
Being as respectful as possible, you appear to have very little understanding of the stock market. Few people do and it would be great if you’d not provide them this bad information. The average person grows too little of their money already, making them Ill informed does them even more of a disservice (but enriches the institutional trading houses).
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The post would be too long to prove you wrong. It’s shorter but to the point to point out stock splits and reverse splits. When a stock splits, say 1 to 10, the math is simple: a 100 dollar stock will tomorrow now be a 10 dollar stock but you now own 10 shares. See how easy the math is regarding share count and value? Reverse split is obviously the reverse but the same principle (though reverse is rarely a good thing).
Bottom line: do not ever repeat online or to anyone needing stock market advice that eliminating shares just devalues a company. Honestly it’s pretty bad you would even reply that misinformation to a post that is trying to get us average people to understand the benefit of investing hard earned and often insufficient money.
You realize a stock split or reverse split does not take money out of a company so obviously the market cap will not change. When a company buys back stock or pays a dividend that money comes from the ‘worth’ of a company which is represented by the market cap value.
In your original example then, are you saying the market cap (company’s value) remains the same when a full 25% of it’s value was paid out from the company’s funds? I think you mistake Buybacks with having the same effect on marketcap as trades between stock investors/institutions.which make no change in a company’s coffers. This is the reason it is not possible for a company to buyback all it’s stock.
“You realize a stock split or reverse split does not take money out of a company so obviously the market cap will not change”
I can only assume either A, you hate the idea of buybacks or B, you are adamantly ignorant. But you be what you want to be, that”s your own call. However and again, please stop making the average person who has little investing knowledge be ignorant. It is tough enough for them already.
I could tell you, under your “logic”, that Google at $2950 a share must be far more valuable than Apple which is at $175 dollar a share (or far more valuable then Microsoft at $335 a share). That would literally be your “logic”. Seriously, that is what you are saying. In the real world market logic, share count is a critical component of pricing (fundamentals such as industry, peers, financial health, PEG, institutional conviction). Google has a billion share count, Apple has a 16+ billion share count. But, yea, Apple buys back 15 billion shares to make them equal in share count to Google, I’m sure, wouldn’t do anything to Apple’s stock price. Just wow…
I’ll use your own words, tersely: “The market cap doesn’t change” (under a share count adjustment of splits etc). Correct. A 1 billion dollar market cap company with a 1$ stock has precisely a 1 billion share count. That 1 billion dollar market cap company then buys back half a billion shares. Guess what? As the “market cap doesn’t change” the remaining half billion share holders made a 100% return on investment. Because a 1billion dollar market cap with a half billion share count is a 2$ stock.
Please stop, You can think whatever you want, dislike of share buybacks or hate of Apple. But your adamantly pushing disinformation to the average person regarding investing just plain sucks. That’s admittedly rude on my part but it angers me to see this. I’m an active trader and investor. I see retailers making ignorant trading and investing decisions too much, blowing up too much of their capital. The algos/institutions are hard enough to beat already, rig as best they can already, without retailers pushing bad information on each other.
“In your original example then, are you saying the market cap (company’s value) remains the same when a full 25% of it’s value was paid out from the company’s funds? I think you mistake Buybacks with having the same effect on marketcap as trades between stock investors/institutions.which make no change in a company’s coffers. This is the reason it is not possible for a company to buyback all it’s stock.”
I’m assuming you are engaging in honest debate here. I hope that is correct.
No, a split vs share buybacks will not be exactly 1:1 stock price comparison. A split is a mechanical action while a buy back is more temporal. However, the underlying logic is precisely the same. The less shares a company has the greater its stock price. Even if the company is in unsound financial circumstances, its float still matters for share price. This is often why reverse splits occur. They take shares off the market which raises its price to avoid being in violation of listing rules (I believe nasdaq is 30 days below 1$ a share).
As the example I made to your fellow anti buy back poster, Google stock price is currently $2950. Apple’s price is $175. The single greatest reason, by a million miles, for the price difference between Google and Apple is share count, full stop. Google has a 1 billion share count, Apple has a 16+ billion share count. If Apple was to buy back 15 billion shares tomorrow (ad ridiculum but the point is correct), Apple stock price would be in the general Google stock price range very quickly. The 1 billion share owners — of which I am — would be doing cartwheels down the street.
Apple has bought back a big amount of their float over the last several years. This has allowed it to outperform it’s earnings growth. No that isn’t the only reason. Non hardware revenue growth, new product revenue, the gold standard recurring revenue growth. But make no mistake, zero, none, share buy backs are one of the major reason for Apple’s share price growth.
One last point, you argue share buy backs don’t make one difference in a company’s coffers. That’s not quite true as companies can maintain shares and use stock as employee compensation. As well, if they pay a 22 cent yield per share dividend, less shares means less dividend payout every quarter. In Apple’s instance they are buying back, currently, about 120 million shares per quarter. Their dividend payout is reduced around 90 million dollars annually(and the resulting tax burden is actually reduced). However, I understand the point you’re getting at. Correct, a 4% share buyback doesn’t automatically cause Apple to mechanically go from 92 billion in annual earnings to 92 billion plus 4%. And if all that mattered was earnings — and share count meant nothing — you’d be right. But as you read above in the Google-Apple comparison, share count matters very very much. Apple has a value that is irrespective of share count (if they were a private company they’d still have an estimated value). It’s value (which will vary from analyst to analyst) is what it is. Now take that value and the amount of shares and divide it. There is your fair value share price. Now take half those shares and throw them in the fireplace, the fair value share price is now doubled. Again, it is shocking that people are arguing that is not true. Neither you or the other poster come across as without reasoning. So disregarding what is patently obvious leads me to believe you simply hate the idea of share buy backs so much it is over riding reason. But the good or bad of buy backs is irrespective of its effect on share price. You are conflating the dislike of the action itself versus the clear value to shareholders.
Your own post shows that you don’t really understand this that much and that you are just regurgitating what you’ve read elsewhere. While it’s obviously true that each of the three owners now own one third of the company, the question is where did the money for the buyout come from? Was it personal to the three owners? If so, then nothing changes in the valuation. Did it come from the company, as it so often does? If so, then the company/s valuation is reduced by that amount. It’s not always simple.
I’m a big Apple supporter, and own enough stock to make you blanch. But, the reality is that there has never been any evidence that stock buybacks increase the stock price. And little evidence that splits do either.
There has been the assumption that as there are fewer shares, the value of the share automatically goes up as there is now a bit more revenue per share. But really, it’s inconsequential. Apple has 16.4 billion shares out there. Buying 100 million back in a quarter is meaningless as the percentage is so small.
Meanwhile, Apple takes on increasing debt loads as a consequence. Currently that debt is $136,5 billion. Almost all due to share buybacks. So, not only has Apple spent hundreds of billions of dollars buying stock back, depleting its cash position, it’s taken on a huge load of debt. Where it could have income off that cash, it now has interest to pay on the debt.
What could Apple have done with the almost $300 billion it used to burn its stock? Yes, cash is part of the equation, though not always as much as it should be. A company with $450 billion in cash is worth more than one with $125 billion and $136.5 billion in debt.
Tim Cook, incinerating hundreds of billions of dollars of cash. Pathetic.
FIRE Tim Cook!