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redditseddit4u t1_j29niz0 wrote

Reply to comment by DragoonXNucleon in [OC] Apple’s cash flow statement visualized by giteam

A couple things to point out. #1 Apple spent about $300 billion in costs of revenue and operating costs which is more than they spend in stock buybacks. That’s not conveyed in the chart since the chart just has net income. #2 when a company does a stock buyback, they’re literally buying back their shares. ‘Normal’ tax rules apply if you’re a stockholder selling your shares back to Apple as part of their share buyback.

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Hamoodzstyle t1_j29ysiz wrote

The person selling their shares to apple is not the only one benefiting, it's also every other shareholder who now owns shares that are higher in demand and thus are worth more money.

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Obvious_Chapter2082 t1_j2bpiix wrote

The higher demand is offset by the lower total equity though. Value per share remains unchanged

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Hamoodzstyle t1_j2bq2wn wrote

Doesn't lower total equity (i.e. number of outstanding shares in the market) with unchanging valuation results in higher value per share.

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Obvious_Chapter2082 t1_j2bqfe4 wrote

The valuation does change though. Outstanding shares decrease, and the amount of total equity also decreases by an equivalent amount (since treasury stock reduces company equity). Since these 2 amounts offset, the company value per outstanding share doesn’t change

There are outside factors that could increase or decrease stock price though, it’s just that people usually conflate this with buybacks

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