Apple Inc., one of the globe’s leading corporations, has made a significant announcement: the approval of an additional $110 billion for share repurchases, marking the largest buyback ever witnessed in the United States.
This move surpasses Apple’s own previous record set in 2018 when it authorized $100 billion in share repurchases. Steve Sosnick, Chief Strategist at Interactive Brokers LLC, remarked on the magnitude of this decision, suggesting that Apple might be transitioning from a high-growth stock to a value stock, prioritizing returns to shareholders over aggressive expansion or research and development.
Remarkably, Apple now holds the top six positions in the list of the ten largest share repurchase announcements ever made in the US, with notable mentions including Chevron Corp. and Alphabet Inc.
In addition to this monumental buyback, Apple recently reported quarterly results that exceeded market expectations. Their sales surpassed estimates, and the company forecasted a return to revenue growth in the current period. Furthermore, Apple increased its quarterly dividend for the twelfth consecutive year, indicating optimism regarding the company’s trajectory and easing concerns about its recent slowdown.
Following these developments, Apple’s shares surged by as much as 7.9% in after-hours trading, potentially adding over $190 billion to its market value if the gains sustain through the next trading day.
This uptick in share value comes as a relief to Apple investors, particularly considering the company’s underperformance compared to its peers in the tech sector thus far this year, with Apple shares down 10% while the broader S&P 500 Index has risen by over 6%.
WHAT DOES A SHARE BUYBACK ENTAIL?
A share buyback occurs when a company invests its funds to purchase its own stock. This action effectively diminishes the available shares in the market, leading to a reduction in the total number of outstanding shares for the company. In theory, this decrease in available shares should increase the value of the remaining ones.
HOW MUCH STOCK DID APPLE REPURCHASE?
Apple’s board sanctioned the repurchase of $110 billion worth of AAPL shares. This figure, as reported by Bloomberg, marks the largest share buyback in the history of U.S. corporations.
