Alex_V

chutzpah said:

Alex_V said:

chutzpah said:

Alex_V said:

You may be right. But it’s the difference between results and consequences. Buying back and retiring shares results in the price of existing shares rising, just as a share split merely doubles the number of shares, halving the value per share. The overall market value of stock remains the same. In theory. But, in practice, those acts have consequences, if investors feel bullish about the decisions made by the Apple board, the stock price might go up, if not, the price might go down. 

No no no no no.  Splitting shares literally makes one share into more shares, it is a direct, incontrovertible, mathematical result.  Retiring shares does not directly result in the price of shares rising.  The share price might rise, but it will be due to a wider mix of factors and is very much an indirect result based on stock market expectations.

Huh?? 

I used this as a guide, I was referring to companies buying their own shares on the open market:
https://en.wikipedia.org/wiki/Share_repurchase
Over and out. 

Previous comment applies.  Share buybacks can lead to share prices rising, but it is by no means guaranteed.  Very, very different scenario from a split leading to a mathematical partitioning of the value of a share, which is absolutely guaranteed.

I think you’re right. I stand corrected. You learn something every day. Unfortunately, I can’t delete my original comment as the time has expired. 

chutzpah said:

Alex_V said:

godofbiscuits said:

I'm going to assume that the stock price can be at all-time high, but the valuation of the company isn't at an all time high because of all the stock buy-backs?   

It’s the opposite. Buy-backs will reduce the number of shares without affecting the total value of the shares on the market. If ‘A’ is the share price; ‘B’ is the number of shares in the market; and ‘C’ is the total value of shares in the market. Market valuation is simply calculated as: A × B = C. Thus A = C / B, that is the share price is also the total value of shares divided by the number of shares. (Correct me if I’m wrong.) By buying shares and retiring them, the value of the remaining shares go up. Buy-backs are done to manipulate the stock price. It is Tim Cook’s way of rewarding those who have bought Apple stock. It does Apple little good as the last time the company issued shares was in the 1980s, but it rewards those, like Tim Cook, who have stock options. Tim Cook might also simply reward so-called ‘investors’ with dividends, although he is not obliged to — the rising stock price, which is a measure of company performance should be reward enough. Arguably, buy-backs are not a good sign, because they signal that the company doesn’t know what to do with its money, when the obvious options would be to increase your investments in R&D or reward your employees (in other words, distribute the proceeds of their success with those who brought it about — but that would be un-American). ;-) 

You're wrong.  Buying back shares does reduce market cap.  Of course it does, the company will be consuming its own cash reserves or taking on debt to finance the buy back.  If the company has fewer assets or higher liabilities then they are worse less, qed lower market cap.  Look at it this way, one way of seeing market cap is as the company's debt to its shareholders, so when a company buys back shares it is paying back some of that debt.

The share price might increase, which is great for the remaining shareholders, but it will not be a necessary consequence of the buy back. e.g. The buy back may give investors a positive view of the company's financial management, a confidence in the stock, and other soft influences, that can eventually lead to the share price rising but they aren't a direct relationship.

You may be right. But it’s the difference between results and consequences. Buying back and retiring shares results in the price of existing shares rising, just as a share split merely doubles the number of shares, halving the value per share. The overall market value of stock remains the same. In theory. But, in practice, those acts have consequences, if investors feel bullish about the decisions made by the Apple board, the stock price might go up, if not, the price might go down. 

Marvin said:

ITGUYINSD said:

It must be hard for these paid commercials to fill enough time when all they have to talk about is 2 extra inches of screen.  Everything else is basically the same.  2 inches = $200 premium.

This laptop is a big deal, it could easily push Apple's Mac sales to 40 million. Great for developers, artists, students, businesses. It's such a long overdue option.

I think you’re right. This thing is going to fly off the shelves.

godofbiscuits said:

I'm going to assume that the stock price can be at all-time high, but the valuation of the company isn't at an all time high because of all the stock buy-backs?   

It’s the opposite. Buy-backs will reduce the number of shares without affecting the total value of the shares on the market. If ‘A’ is the share price; ‘B’ is the number of shares in the market; and ‘C’ is the total value of shares in the market. Market valuation is simply calculated as: A × B = C. Thus A = C / B, that is the share price is also the total value of shares divided by the number of shares. (Correct me if I’m wrong.) By buying shares and retiring them, the value of the remaining shares go up. Buy-backs are done to manipulate the stock price. It is Tim Cook’s way of rewarding those who have bought Apple stock. It does Apple little good as the last time the company issued shares was in the 1980s, but it rewards those, like Tim Cook, who have stock options. Tim Cook might also simply reward so-called ‘investors’ with dividends, although he is not obliged to — the rising stock price, which is a measure of company performance should be reward enough. Arguably, buy-backs are not a good sign, because they signal that the company doesn’t know what to do with its money, when the obvious options would be to increase your investments in R&D or reward your employees (in other words, distribute the proceeds of their success with those who brought it about — but that would be un-American). ;-) 

Steve Kovach of CNBC has tested Meta’s and Apple’s headsets and he says the difference between them is “night and day.”