They should buy the company before a competitor roars in, and either makes a major deal, or buys it themselves. It would be a better way to spend money than more stock buybacks, which just burn it.
Apple already buys a ton of companies. Buying a large one is going to run into antitrust concerns.
Stock buybacks isn’t necessarily a bad thing as long as you do it in an opportunist manner. Some companies do it to prop up the stock and give investors a false sense of security. IBM for example needed new blood and new products so they needed a transformative acquisition.
Apple doesn’t need a big deal. I think they look at stock buybacks and think of it in terms of keeping their dividend in a certain range. They could increase their dividend or buy back stock... buybacks accomplish more.
No it won’t. Where are you getting that from? This isn’t a big company, as big companies go these days. Besides size has nothing to do with it. You misunderstand anti trust actions. If what you said were true, then the merger between T-Mobile and Sprint which went through would be a major fail. There’s continuous talk about Apple buying ?Disney, Tesla, Netflix and others. None would raise antitrust actions.
I've been investing since I was a kid in 1963. Since buybacks became legal, there has never been a single case of it being useful. It’s just money down the drain that the company could otherwise use for R&D, production, marketing, etc. which would add to sales and the bottom line, which would result in a higher stock price. Even the math of buybacks doesn’t work.
your last point is ridiculous. You should look at what actually happens instead of just throwing out random thoughts. Apple buys back vastly more stock than it pays out in dividends. Buybacks accomplish nothing.
And yet lots of companies continue to do them. Smart people in charge, and yet they continue to do this thing that accomplishes nothing. It's almost as if they know something you don't, unthinkable though that might be,
They actually don’t know anything. That’s the problem. There is a theoretical advantage. But it’s never been shown to work in the real world. If a company spends $50 billion to buy back stock, a big blow to its cash reserves, and that’s just 1% of the outstanding stock, then theoretically, that should result in a 1% rise in share price.
Where did you get that idea? No it shouldn't. Theoretically the stock price shouldn't be affected at all, as what you're doing is increasing each stockholders stake, not the value of individual shares - the company value hasn't increased, it's actually decreased because it has worn down its cash reserve. Buying back shares is theoretically worthwhile if you think the stock is presently undervalued, since eventual increases in value will return more to a smaller pool of shareholders at a supressed cost in the present.
It also has a short term impact, since any big purchases affect the price through general supply and demand, but that's rarely the point of stock buybacks at all.
I don't think you klnow as much as you think you do.
It’s not what I say. It’s what the numerous papers by clueless economists have been saying since buybacks became legal. And yes, they say that the price of a share should go up by the increase in EPS per share that results from share buybacks.
It has nothing at all to do with the value of the company. Only the higher supposed value of each share. Don’t criticize unless you actually understand the argument.
The share price has nothing at all to do with the value of the company? What economists are you reading exactly? I would advise changing your news and commentary sources, they seem to have profound misunderstandings of the stock market, or you are misunderstanding them
The price of the individual share has nothing to do with the value of the company by itself. It’s the multiplication of the share price by the number of shares. That should be pretty obvious. So if the company buys back shares, it takes a percentage off the overall value. Get it?
Sell 5%, and in theory, the price per share should increase by 5% because each share now has 5% greater EPS, while, unless the share price increases by that 5% to compensate, has the company worth 5% less than before. If money is borrowed to buy those shares, that might actually lower the shares value.
They should buy the company before a competitor roars in, and either makes a major deal, or buys it themselves. It would be a better way to spend money than more stock buybacks, which just burn it.
Apple already buys a ton of companies. Buying a large one is going to run into antitrust concerns.
Stock buybacks isn’t necessarily a bad thing as long as you do it in an opportunist manner. Some companies do it to prop up the stock and give investors a false sense of security. IBM for example needed new blood and new products so they needed a transformative acquisition.
Apple doesn’t need a big deal. I think they look at stock buybacks and think of it in terms of keeping their dividend in a certain range. They could increase their dividend or buy back stock... buybacks accomplish more.
No it won’t. Where are you getting that from? This isn’t a big company, as big companies go these days. Besides size has nothing to do with it. You misunderstand anti trust actions. If what you said were true, then the merger between T-Mobile and Sprint which went through would be a major fail. There’s continuous talk about Apple buying ?Disney, Tesla, Netflix and others. None would raise antitrust actions.
I've been investing since I was a kid in 1963. Since buybacks became legal, there has never been a single case of it being useful. It’s just money down the drain that the company could otherwise use for R&D, production, marketing, etc. which would add to sales and the bottom line, which would result in a higher stock price. Even the math of buybacks doesn’t work.
your last point is ridiculous. You should look at what actually happens instead of just throwing out random thoughts. Apple buys back vastly more stock than it pays out in dividends. Buybacks accomplish nothing.
And yet lots of companies continue to do them. Smart people in charge, and yet they continue to do this thing that accomplishes nothing. It's almost as if they know something you don't, unthinkable though that might be,
They actually don’t know anything. That’s the problem. There is a theoretical advantage. But it’s never been shown to work in the real world. If a company spends $50 billion to buy back stock, a big blow to its cash reserves, and that’s just 1% of the outstanding stock, then theoretically, that should result in a 1% rise in share price.
Where did you get that idea? No it shouldn't. Theoretically the stock price shouldn't be affected at all, as what you're doing is increasing each stockholders stake, not the value of individual shares - the company value hasn't increased, it's actually decreased because it has worn down its cash reserve. Buying back shares is theoretically worthwhile if you think the stock is presently undervalued, since eventual increases in value will return more to a smaller pool of shareholders at a supressed cost in the present.
It also has a short term impact, since any big purchases affect the price through general supply and demand, but that's rarely the point of stock buybacks at all.
I don't think you klnow as much as you think you do.
It’s not what I say. It’s what the numerous papers by clueless economists have been saying since buybacks became legal. And yes, they say that the price of a share should go up by the increase in EPS per share that results from share buybacks.
It has nothing at all to do with the value of the company. Only the higher supposed value of each share. Don’t criticize unless you actually understand the argument.
The share price has nothing at all to do with the value of the company? What economists are you reading exactly? I would advise changing your news and commentary sources, they seem to have profound misunderstandings of the stock market, or you are misunderstanding them
The price of the individual share has nothing to do with the value of the company by itself. It’s the multiplication of the share price by the number of shares. That should be pretty obvious. So if the company buys back shares, it takes a percentage off the overall value. Get it?
Sell 5%, and in theory, the price per share should increase by 5% because each share now has 5% greater EPS, while, unless the share price increases by that 5% to compensate, has the company worth 5% less than before. If money is borrowed to buy those shares, that might actually lower the shares value.
No, because the value of the company incporates cash that they hold and debt that they owe, EPS is neither the only measure, nor a particularly reliable measure when the number of shares outstanding are changing. If they are using that cash or debt to finance a share buyback, then they are simply paying off shareholders with assets and/or liabilities, and as such the value of the share should not change (apart from temporary fluctuations due to day trading impact). Obviously that is the case, otherwise companies would be buying back shares all the time*. EPS will rise as you say, but cash or debt per share will also be impacted, and it should theoretically balance out if the company is accurately valued. However, if the company is undervalued then that is when share buybacks can provide value to shareholders, because EPS, cash and assets will have equated to a lower share price which will eventually rise when the market catches up. That is the proper reason why companies would buy back shares to give value to continuing shareholders**.
As always, the only true way to give value to shareholders is to increase the value (or at least exceed expectation of increasing value) of the company by making profit. Anything else is a temporary hack or a con, but if the stock market is not appreciating the capacity of a company to generate profit, then the company can take advantage by buying back shares. Likewise if the company thinks it is overvalued then issuing new shares is a pretty good plan.
* Par example, in the unlikely event that Apple were to buy back every single share but one then your argument would have the share price equal the market cap of $1.17 trillion (actually by your maths it would exceed it, but nevermind that). But in order to do that Apple would have to take on debt and erode cash reserves to the order of $1.17 trillion. That has to be priced in, EPS alone is not enough. The way that the stock market aims (in theory) to value a company is its current cash and asset position plus/minus all of the profit/loss that it is expected to earn in its lifetime.
* obviously, given that it's the stock market we're talking about, there can also be smoke and mirrors tactics in play to promote optimisim and speculation.
They should buy the company before a competitor roars in, and either makes a major deal, or buys it themselves. It would be a better way to spend money than more stock buybacks, which just burn it.
Apple already buys a ton of companies. Buying a large one is going to run into antitrust concerns.
Stock buybacks isn’t necessarily a bad thing as long as you do it in an opportunist manner. Some companies do it to prop up the stock and give investors a false sense of security. IBM for example needed new blood and new products so they needed a transformative acquisition.
Apple doesn’t need a big deal. I think they look at stock buybacks and think of it in terms of keeping their dividend in a certain range. They could increase their dividend or buy back stock... buybacks accomplish more.
No it won’t. Where are you getting that from? This isn’t a big company, as big companies go these days. Besides size has nothing to do with it. You misunderstand anti trust actions. If what you said were true, then the merger between T-Mobile and Sprint which went through would be a major fail. There’s continuous talk about Apple buying ?Disney, Tesla, Netflix and others. None would raise antitrust actions.
I've been investing since I was a kid in 1963. Since buybacks became legal, there has never been a single case of it being useful. It’s just money down the drain that the company could otherwise use for R&D, production, marketing, etc. which would add to sales and the bottom line, which would result in a higher stock price. Even the math of buybacks doesn’t work.
your last point is ridiculous. You should look at what actually happens instead of just throwing out random thoughts. Apple buys back vastly more stock than it pays out in dividends. Buybacks accomplish nothing.
And yet lots of companies continue to do them. Smart people in charge, and yet they continue to do this thing that accomplishes nothing. It's almost as if they know something you don't, unthinkable though that might be,
They actually don’t know anything. That’s the problem. There is a theoretical advantage. But it’s never been shown to work in the real world. If a company spends $50 billion to buy back stock, a big blow to its cash reserves, and that’s just 1% of the outstanding stock, then theoretically, that should result in a 1% rise in share price.
Where did you get that idea? No it shouldn't. Theoretically the stock price shouldn't be affected at all, as what you're doing is increasing each stockholders stake, not the value of individual shares - the company value hasn't increased, it's actually decreased because it has worn down its cash reserve. Buying back shares is theoretically worthwhile if you think the stock is presently undervalued, since eventual increases in value will return more to a smaller pool of shareholders at a supressed cost in the present.
It also has a short term impact, since any big purchases affect the price through general supply and demand, but that's rarely the point of stock buybacks at all.
I don't think you klnow as much as you think you do.
It’s not what I say. It’s what the numerous papers by clueless economists have been saying since buybacks became legal. And yes, they say that the price of a share should go up by the increase in EPS per share that results from share buybacks.
It has nothing at all to do with the value of the company. Only the higher supposed value of each share. Don’t criticize unless you actually understand the argument.
The share price has nothing at all to do with the value of the company? What economists are you reading exactly? I would advise changing your news and commentary sources, they seem to have profound misunderstandings of the stock market, or you are misunderstanding them
The price of the individual share has nothing to do with the value of the company by itself. It’s the multiplication of the share price by the number of shares. That should be pretty obvious. So if the company buys back shares, it takes a percentage off the overall value. Get it?
Sell 5%, and in theory, the price per share should increase by 5% because each share now has 5% greater EPS, while, unless the share price increases by that 5% to compensate, has the company worth 5% less than before. If money is borrowed to buy those shares, that might actually lower the shares value.
No, because the value of the company incporates cash that they hold and debt that they owe, EPS is neither the only measure, nor a particularly reliable measure when the number of shares outstanding are changing. If they are using that cash or debt to finance a share buyback, then they are simply paying off shareholders with assets and/or liabilities, and as such the value of the share should not change (apart from temporary fluctuations due to day trading impact). Obviously that is the case, otherwise companies would be buying back shares all the time*. EPS will rise as you say, but cash or debt per share will also be impacted, and it should theoretically balance out if the company is accurately valued. However, if the company is undervalued then that is when share buybacks can provide value to shareholders, because EPS, cash and assets will have equated to a lower share price which will eventually rise when the market catches up. That is the proper reason why companies would buy back shares to give value to continuing shareholders**.
As always, the only true way to give value to shareholders is to increase the value (or at least exceed expectation of increasing value) of the company by making profit. Anything else is a temporary hack or a con, but if the stock market is not appreciating the capacity of a company to generate profit, then the company can take advantage by buying back shares. Likewise if the company thinks it is overvalued then issuing new shares is a pretty good plan.
* Par example, in the unlikely event that Apple were to buy back every single share but one then your argument would have the share price equal the market cap of $1.17 trillion (actually by your maths it would exceed it, but nevermind that). But in order to do that Apple would have to take on debt and erode cash reserves to the order of $1.17 trillion. That has to be priced in, EPS alone is not enough. The way that the stock market aims (in theory) to value a company is its current cash and asset position plus/minus all of the profit/loss that it is expected to earn in its lifetime.
* obviously, given that it's the stock market we're talking about, there can also be smoke and mirrors tactics in play to promote optimisim and speculation.
That makes no sense. You need to read up on share buybacks.
If you look at Apple’s valuation over the years, and read what has been said about it, you would see that all of the cash Apple has had has had very little affect on their valuation, and that’s been noted many times. Cash;s contribution to a companies valuation is heavily discounted. And that’s a fact.
They should buy the company before a competitor roars in, and either makes a major deal, or buys it themselves. It would be a better way to spend money than more stock buybacks, which just burn it.
Apple already buys a ton of companies. Buying a large one is going to run into antitrust concerns.
Stock buybacks isn’t necessarily a bad thing as long as you do it in an opportunist manner. Some companies do it to prop up the stock and give investors a false sense of security. IBM for example needed new blood and new products so they needed a transformative acquisition.
Apple doesn’t need a big deal. I think they look at stock buybacks and think of it in terms of keeping their dividend in a certain range. They could increase their dividend or buy back stock... buybacks accomplish more.
No it won’t. Where are you getting that from? This isn’t a big company, as big companies go these days. Besides size has nothing to do with it. You misunderstand anti trust actions. If what you said were true, then the merger between T-Mobile and Sprint which went through would be a major fail. There’s continuous talk about Apple buying ?Disney, Tesla, Netflix and others. None would raise antitrust actions.
I've been investing since I was a kid in 1963. Since buybacks became legal, there has never been a single case of it being useful. It’s just money down the drain that the company could otherwise use for R&D, production, marketing, etc. which would add to sales and the bottom line, which would result in a higher stock price. Even the math of buybacks doesn’t work.
your last point is ridiculous. You should look at what actually happens instead of just throwing out random thoughts. Apple buys back vastly more stock than it pays out in dividends. Buybacks accomplish nothing.
And yet lots of companies continue to do them. Smart people in charge, and yet they continue to do this thing that accomplishes nothing. It's almost as if they know something you don't, unthinkable though that might be,
They actually don’t know anything. That’s the problem. There is a theoretical advantage. But it’s never been shown to work in the real world. If a company spends $50 billion to buy back stock, a big blow to its cash reserves, and that’s just 1% of the outstanding stock, then theoretically, that should result in a 1% rise in share price.
Where did you get that idea? No it shouldn't. Theoretically the stock price shouldn't be affected at all, as what you're doing is increasing each stockholders stake, not the value of individual shares - the company value hasn't increased, it's actually decreased because it has worn down its cash reserve. Buying back shares is theoretically worthwhile if you think the stock is presently undervalued, since eventual increases in value will return more to a smaller pool of shareholders at a supressed cost in the present.
It also has a short term impact, since any big purchases affect the price through general supply and demand, but that's rarely the point of stock buybacks at all.
I don't think you klnow as much as you think you do.
It’s not what I say. It’s what the numerous papers by clueless economists have been saying since buybacks became legal. And yes, they say that the price of a share should go up by the increase in EPS per share that results from share buybacks.
It has nothing at all to do with the value of the company. Only the higher supposed value of each share. Don’t criticize unless you actually understand the argument.
The share price has nothing at all to do with the value of the company? What economists are you reading exactly? I would advise changing your news and commentary sources, they seem to have profound misunderstandings of the stock market, or you are misunderstanding them
The price of the individual share has nothing to do with the value of the company by itself. It’s the multiplication of the share price by the number of shares. That should be pretty obvious. So if the company buys back shares, it takes a percentage off the overall value. Get it?
Sell 5%, and in theory, the price per share should increase by 5% because each share now has 5% greater EPS, while, unless the share price increases by that 5% to compensate, has the company worth 5% less than before. If money is borrowed to buy those shares, that might actually lower the shares value.
No, because the value of the company incporates cash that they hold and debt that they owe, EPS is neither the only measure, nor a particularly reliable measure when the number of shares outstanding are changing. If they are using that cash or debt to finance a share buyback, then they are simply paying off shareholders with assets and/or liabilities, and as such the value of the share should not change (apart from temporary fluctuations due to day trading impact). Obviously that is the case, otherwise companies would be buying back shares all the time*. EPS will rise as you say, but cash or debt per share will also be impacted, and it should theoretically balance out if the company is accurately valued. However, if the company is undervalued then that is when share buybacks can provide value to shareholders, because EPS, cash and assets will have equated to a lower share price which will eventually rise when the market catches up. That is the proper reason why companies would buy back shares to give value to continuing shareholders**.
As always, the only true way to give value to shareholders is to increase the value (or at least exceed expectation of increasing value) of the company by making profit. Anything else is a temporary hack or a con, but if the stock market is not appreciating the capacity of a company to generate profit, then the company can take advantage by buying back shares. Likewise if the company thinks it is overvalued then issuing new shares is a pretty good plan.
* Par example, in the unlikely event that Apple were to buy back every single share but one then your argument would have the share price equal the market cap of $1.17 trillion (actually by your maths it would exceed it, but nevermind that). But in order to do that Apple would have to take on debt and erode cash reserves to the order of $1.17 trillion. That has to be priced in, EPS alone is not enough. The way that the stock market aims (in theory) to value a company is its current cash and asset position plus/minus all of the profit/loss that it is expected to earn in its lifetime.
* obviously, given that it's the stock market we're talking about, there can also be smoke and mirrors tactics in play to promote optimisim and speculation.
That makes no sense. You need to read up on share buybacks.
If you look at Apple’s valuation over the years, and read what has been said about it, you would see that all of the cash Apple has had has had very little affect on their valuation, and that’s been noted many times. Cash;s contribution to a companies valuation is heavily discounted. And that’s a fact.
I never said Apple was accurately valued, I implied the opposite in fact. Valuation of a company only really exists in theory as a combination of available information and the expectations of the important actors. Which makes share buybacks a very effective use of cash when the information and/or expectation is unduly depressed, or not appreciated, though admittedly only if there is a likelihood of a correction to the depression/apppreciation at some point. As you say, some problems with Apple's valuation seem to be enduring, which is a point of frustration for many.
Retail is effectively dead for the next 16 months (or at least until the Feds come clean on the real effectiveness of hydroxychloroquine), so there’s plenty of time for Apple to innovate in this space regardless of its current usefulness.
Comments
Sell 5%, and in theory, the price per share should increase by 5% because each share now has 5% greater EPS, while, unless the share price increases by that 5% to compensate, has the company worth 5% less than before. If money is borrowed to buy those shares, that might actually lower the shares value.
As always, the only true way to give value to shareholders is to increase the value (or at least exceed expectation of increasing value) of the company by making profit. Anything else is a temporary hack or a con, but if the stock market is not appreciating the capacity of a company to generate profit, then the company can take advantage by buying back shares. Likewise if the company thinks it is overvalued then issuing new shares is a pretty good plan.
* Par example, in the unlikely event that Apple were to buy back every single share but one then your argument would have the share price equal the market cap of $1.17 trillion (actually by your maths it would exceed it, but nevermind that). But in order to do that Apple would have to take on debt and erode cash reserves to the order of $1.17 trillion. That has to be priced in, EPS alone is not enough. The way that the stock market aims (in theory) to value a company is its current cash and asset position plus/minus all of the profit/loss that it is expected to earn in its lifetime.
* obviously, given that it's the stock market we're talking about, there can also be smoke and mirrors tactics in play to promote optimisim and speculation.
If you look at Apple’s valuation over the years, and read what has been said about it, you would see that all of the cash Apple has had has had very little affect on their valuation, and that’s been noted many times. Cash;s contribution to a companies valuation is heavily discounted. And that’s a fact.