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Wow. Is stock buybacks really “negative” flows though? Always thought it was stock manipulation.

Stock manipulation?!?!?!? It's giving directly back to shareholders... It's a strong statement that leadership believes their stock is undervalued and that the best investment they can make is in their own company. Stock manipulation lmao

Edit: and to answer your question... Of course it's negative in this context, the money is spent.

It's also a strong statement that leadership doesn't want to get fired, and that leadership would love their equity stake to increase in value. Stock buybacks are not investments in the company, as Apple already got everything they were going to get when the shares were floated. Apple has been sitting on an absolute pile of cash for a long time.

Stock buybacks should be illegal. Maybe then apple would finally invest in newer tech for their phones and fix their texting issues.

These comments hurt my eyes.

Sure, its a negative flow, but think of the implication.

They spent nearly as much buying back stock as they spent running the fucking company. So where did that money go, well it went to shareholders. Ok, so who are shareholders. Well, a lot of us have small amounts but a lot of them have big amounts. Except in a buyback its not the shareholders are given payments in cash. No, instead shares are taken off market, so the singular share goes up in value? Whys it matter? Taxes. If your asset appreciated you don't pay taxes until you sell. If they just did a dividend, you would pay taxes now.

So ultimately this is a company making so much profit they can distributing it to their investors in a tax free way. Yet, their balance statements show a loss.

The issue isn't buybacks. The issue is our tax and wealth laws that allow the wealthy to accrue billions. A buyback is just a company spending their own money to buy their own stock, thats it.

Aren't the leadership shareholders themselves? If so, it's more of a strong statement that they like money.

Stock buy backs are essentially dividends paid out with out the extra tax that investors have to pay (Tax on the dividend AND Tax on the capital gain compared to just tax on the capital gain). Its also easier to manage than paying out dividends to every single investor. Provided the investor is smart enough to take some of his gains out. The rising prices does provide additional liquidity to the big players. In essence, you the layman with his 401k is only there to get screwed over.

A stock buyback is effectively the same as a dividend. It's just a way to reward investors.

I gotta say, a cash flow statement conveys the exact same information much more effectively

I get that this isn't an investing sub but guys.. come on.

If it's good for them it's good for all shareholders. It is their fiduciary responsibility to do what is best for shareholders.

All that money, and yet they only pay the people on mining level the bare minimum that they need to scrape by

Buybacks have no value in this economy except to enrich investors. And that is the issue. Instead of investing back into the company, pay raises for employees etc. It goes straight to the top. It is the number one issue. U r talking about.

Stock buybacks should be illegal... Period.

This is the issue, investors are only in it for short term gains. We should make buybacks illegal so they have to be in the company long-term to create more stability in the company and market. Make them play by the same rules as the rest of the world.

What do stock buybacks have to do with short term gains? All a stock buyback does is increase the share price by buying shares at whatever the current share price is.

You're incentivizing investors to sell during buy backs, as the price is being pumped up.

If the crypto scene has taught u, No one should trust investors to hold their positions when they have inside information like this

Just cause the share price goes up doesn't mean it's time to sell lol.

Right, and your going to put all your trust in investors to keep the stock long-term because of their "genius" iq and "conservative strategies" .

Sorry but I am skeptical af and no longer have any respect nor trust for investors at that level.

I'm tired of giving control of companies and their fate to investors like this. It's about time companies are trated like the real economic engine they should be, jobs, taxes and creating value. Instead of playing with them like financial tools to enrich the already wealthy.

The idea of buy backs is completly benefitting one class of people, and the only way we can finally have fair distribution of wealth is to stop this tactic that only the lucky few are able to benefit from.

I'm not 100% sure, but a lot of people probably own AAPL as a part of the S&P 500 as an ETF or pensions fund or something. Also they're financial tools that everyone can use. It just so happens that the wealthiest people in society are the ones that use them. I'm not saying that everyone has equal opportunity or access to them, but there's really nothing stopping people from investing outside of a lack of capital which is easily solved using ETFs or even a margin account for the less risk averse.

The marketable securities should be added to the cash balance. It’s just a short term vehicle to park cash. So that 135.7 increased cash and marketable securities balance

Lol "nothing stopping people".

That is the difference between our perspective. There are so many barriers for working class folks to invest in stocks, it makes no sense to trust these whales at the tops to trickle down their wealth to the rest.

What, like the average 401k has like 5dollars of applstock in it.. Lol come-on! Buying back stocks in appl will be a blip for the average investor.

Reagnomics doesn't work, and your idealogy fails to bring in the real dynamics of how the stock market works. Again, buybacks are just another tool that only make a real difference if you area full-time investor with wealth spewing out of your wallet.

And what should they do with the money? They don’t have the management capacity to invest it. The alternative is dividends, which is way less tax optimization for investors (since you have to take it). Buybacks by themselves do not increase share price anyways.

It's good for the shareholders' bottom line short-term, but can be bad long-term if good investments are withheld.

Of course the owners of the company (and their proxies, i.e. management) have every right to cash out now when the company is doing well and it's understandable they care more about nice things now than the future of the company, but to suggest this is somehow a "responsibility" is some bizarre balls-gargling.

What are you talking about. I have 50k total saved and I own apple stocks through index funds. It's not hard to get into the stock market.

You're just assuming that I subscribe to trickle down economics, which I don't btw. I would support an initiative for the government to invest some money for each high school student so that they have some wealth to start out. All I'm trying to point out is that stock buybacks are not the enemy you are making them out to be. They are nearly identical to dividends in their effect. Just because you don't understand it doesn't make it evil.

Invest it into the company through living wages for employees, health benefits, r and d, you know... The things companies originally were supposed to do

Because it's literally the investors running away with the money, leaving the employees who labored for it high and dry.

I do understand it and I am pointing it out as peak wealth redistribution. It takes all the hard earned labor and value the employees at the company made, and gives it to investors who spend 4times a year advising managment.

It's utterly dispicable and financializes companies into money printing machines. Thus giving management reasons to outsource and costcut and destroy the US economy further.

Ps, I really am getting tired of your strawmanning here, bringing up different points that have nothing to do with my comments. If u want to support buy backs In a public forum, be my guest. I am with the few with a business and financial education of who see the real reason they exist and how they are used. And your pro position is not going to change that truth, no matter how you try to explain the benefits of them.

Ok whatever bro

It is if you don't have 50k bro... The stock market is for people who have money. Other folks like me have to spend what I get in paychecks on things that keep me and my family alive

It is literally illegal for them to not do what's going to provide the best return to shareholders. Shareholders would need to take issue with whatever action was taken and take the board to court, but nobody is doing a stock buyback to personally enrich themselves.

You've mangled so many terms here I don't know where to start... Do you think there's a difference between owners and shareholders? Cashing out means selling shares, doing a buyback relies on the market to uphold the current valuation and increase the share price to keep the market cap level. If the market thinks insiders are only doing the buyback to 'cash out' and that it's not in the best interest of the corporation, that won't happen.

I'll let you get back to childish insults now.

You realize how much tech workers make right?

Fair enough.

So workers don't deserve to make money equivalent to the value they produce?

Ur okay letting a rich investors take that money from you? Man stop protecting those in power and punch up for once.

Stop punching down at the workers who actually do the labor in this economy.

You said living wages. Apple software engineers with even a few years of experience make at least $250k lmao

>It is literally illegal for them to not do what's going to provide the best return to shareholders.

That is an often repeated misconception. A director has a duty of loyalty and care. As long as any decision is made in entire fairness or approved by an independent director courts historically give a lot of leeway. And rightly so. Firstly because most decisions that increase shareholder value on an arbitrary timescale are undesirable and a lot of decisions that will have a negative impact on shareholder value on an arbitrary timescale might still be very attractive. Secondly, it would paralyze the decision-making process.

Just like dividends- share buyback is- in theory- a value-neutral transaction for shareholders (except some tax benefits) but it is a pretty bad signal to give for a tech company imo (what apple is communicating to shareholders is that they can't find a better way to invest the money that would generate value) and has some inherent risks for the company.

And the CEO and investors make 400times that amount.

Plus why not pay the frontline workers, customer support, etc. more if ur so butthurt about software engineers making money. Apple has more than just software engineers running it u know?

>It is literally illegal for them to not do what's going to provide the best return to shareholders.

Yes, management famously only takes decisions that are best for the company. All they have to do is pinky swear that they believe they are acting in the best interests of the company.

>nobody is doing a stock buyback to personally enrich themselves.

Well, except for the ones who are.

>Do you think there's a difference between owners and shareholders?

No? God forbid people use synonyms!

>Cashing out means selling shares

No, not necessarily.

>doing a buyback relies on the market to uphold the current valuation and increase the share price to keep the market cap level

So what?

>If the market thinks insiders are only doing the buyback to 'cash out' and that it's not in the best interest of the corporation, that won't happen.

"The market" thinks Bitcoins are worth $16,524 and that Gamestop increased in value more than 50-fold in a few months' time.

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I don't disagree with anything you've said.

You're hopeless. Goodbye

Or they could, I don't know, not use oppressed labor to make their products? Why do you think tech is the only place apple can spend their income?

And people think oil companies make too much money.

This is however not how business works. I am pretty sure Apple Pay’s pretty well. As for r&d, they spent a shitload already. And you don’t want to start another series of conglomerates like we had in the 70s and 80s, when utilities owned malls and rental car companies. That’s not good for anybody. Lastly, you would also have to stop special dividends, which is not not going to happen. Basically buybacks are a good way to return to cash to shareholders to reinvest in other companies.

What is this kind of chart called?

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.

This is also a fundamental misunderstanding of what buybacks do. Do you think dividends enrich investors undeservedly? Same thing.

Waterfall chart

Explain to me how giving higher wages supports giving conglomerates more power?

I mean how come whenever the little guy gets money people are sooo pissed off. But when we call out the rich people misusing their wealth it's okay, because they "know" how to spend money "better"

I Mena the little guy already gets punched down at. Punch up for God's sake. Shareholders = the wealthy

You’re the one moving the goal posts so you can continue to suck off 1%ers

Sounds like a China problem

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.

Not sure I agree that 401ks are really getting screwed over here. Your standard 401k with some ETFs holding apple stock get more valuable as a result of buybacks. That means more money in the hands of say a retiree pulling money out of their 401k.

Does marketable securities include short term T-bills?

Anything they plan to sell (rather than hold for the longer term). So think so. Point is that it’s liquid almost like cash and in financial analysis you always look at “cash and marketable securities”

Isn’t Apple trying to take production out of China though? And isn’t most of the oppressed labor happening in places like Congo where China is operating operating some 90% of the mines extracting materials to build smartphones? Cuz if so that sounds more like an Apple/US Problem in development, once again exploiting Africa to do so.

You're not wrong but the issue is that the rising price is not sustainable, ie short term. This is because the company no longer wants or needs to retain all that money to grow the business. Over time, the market starts discounting that factor and the buy back gain that you had unrealized, no longer exists. Meaning, you lost out on your dividends. If you take an active role in your personal investments or if you've given your money to some sleazy fund, they'll make sure you're out before the market is. 401k's usually lag behind. I'm not saying you won't be profitable at all, you just lose out on that 'extra profitability'.

Lmfao... Just try and prove that dumbass statement Of yours.

I did. You’re rattling off le reddit npc phrases like living wages while discussing a class of individuals who make more out of college than you will in your 40s. They don’t need you to fellate them

Another “America bad” Reddit npc. So close to making an actual thought before devolving back into braindead takes. China owns and/or funds the DRC cobalt mines. It’s a China problem

It isn't an npc. Listen to what the people are saying. All the wealth created is made by people at the bottom. Richasshokes would have no money at all if the people at the bottom worked in low wage positions. Real material value is done through labor, not moving money around on screens... This whole system is setup so people like you think you are creating more value than the actual labor of people creating the product or providing their service.

I work with entrepreneurs on a daily basis, and I know just how egotistical and how they live in a non-reality environment.

They think everything they do is all the work needed and they fail unless they hire other experts to take parts of the business over. Businesses are all collaborative efforts, and should be treated like meritcracy. And to say one person deserve 400times more than the actual workers is the most shittiest propganda to fall a victim to.

Material wealth is built on materials and labor, everything else is parsetic and gambling.

Things haven't bean this bad in terms of inequality since... Ever. Even the guided age had better equality. We are at a point where the greedy have fallen vicitem to their own propganda, and don't realize how better the world would be without the 1% and the dick suckers who promote them.

That’s not what I meant. Sorry. Obviously that would work - but in the end, it’s a market for labor. I am for minimum wage $25 plus inflation - but that wouldn’t change this as nobody at Apple makes that little (well, maybe some janitors, but not enough to change this picture). Companies will be profit/cash flow maximizing under the rules allowed. A cash machine like Apple will always generate more cash than they can reasonably invest in new businesses

Can someone explain how depreciation and amortization yielded a positive flow? I know depreciation to be the loss of asset value and amortization to be repayment of debt. Just not sure how that category generated money in.

Makes sense, sounds like looking at just cash is pretty much useless

They are non cash expenses from the income statement. So when doing a true cash to cash walk you add these expenses back. The loss in value is reflected in the asset section of the balance sheet.

Correct. And some companies have so much cash they put some in longer term investments - for example, a non liquid bond. If you don’t plan to sell, that shows up in long term assets. Was the case when Apple has hundreds of billions for example

Here’s some examples of large pension funds for US, Canada, and Norway that own Apple shares:

https://www.barrons.com/amp/articles/apple-stock-intel-microsoft-ge-51668119548

https://www.barrons.com/amp/articles/apple-stock-tesla-evs-nio-xpeng-li-auto-51669927451

https://finance.yahoo.com/amphtml/news/norway-massive-pension-fund-loses-213122070.html

Funneling $90 billion into market liquidity makes bankers and institutional investors happy. It certainly seems like a company with the resources of apple and 90 billion in “excess cash” could invest in R&D, reinvent the wheel, or any number of world changing alternatives. Throwing the money back to the stock market is a lack of creativity.

Got it. Thank you for explaining!

A lot of people think it’s stock manipulation, but it’s not. Buybacks don’t change the share price, it’s just a way to get cash to investors

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

With a decade of low interest rates, their investment opportunities are probably tapped out. If shareholders would rather have cash back, I can’t blame Apple for doing that

Buybacks don’t pump up the share price

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

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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That's not how market cap works, brother.

Think I follow but it’s a funny way of doing it. I’m more used to seeing cash in from customers rather than profit minus impairments.

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Well, you aren’t paying taxes on it because you haven’t profited off the increase in value yet. The profit occurs when you sell, hence the taxes.

Like if you own a baseball with Babe Ruth’s signature it will go up in value with time, but you won’t actually get any cash from that unless you sell the baseball. Let’s say you were taxed on that increase in value before selling… ok, so you pay the tax even though you haven’t actually gained any money yet. After you pay the tax, you have the ball re-appraised and find out to your surprise that the signature is fake. Suddenly, your ball is worthless and you just paid taxes for money that you never actually had. Stocks work on a similar principle because “value” isn’t the same as “profit”

I mean i believe reading they sold some bonds in the German market that were like 0% interest or maybe even negative? Like of course they’re gonna take on debt and do stock buybacks, they can already fund whatever R&D they want

Nothing less motivating than money spent 🙄

Relativity

Interesting way to teach service.

shiii mind explaining where I went wrong in my understanding?

I know what all of those words mean, but not in that order.

“I’ll show you where to look but not what to see” What do you think?

You have a lemonade stand. Between your 100lbs of lemons, 18 kilos of sugar, some ice cube trays, a table, and the earning potential it has over the next few months, you figure you could sell the business for $1000. This is your 'market cap'.

You want some cash right now to buy a new sign to go over your table and some other things so you decide to 'take your business public' and let 3 of your friends buy in. You split the company into 4 equal 'shares' and value them at $250 each.

Over the summer you all take turns working the stand, you reinvest the profits and open a second stand. Everything is going great until fuckin' Steve decides he's done working, wants to divest of his part of the company and relax until school starts up again.

The company is bigger now, has more inventory, more growth potential, more revenue, cash on hand from recent sales, you all decide to value it at $4000. Now if someone had $1000 they could purchase his share for themselves, but nobody has taken any profits, so instead the company buys back his share with that cash on hand. So by spending $1000 the company is now worth $3000 and is split 3 ways as that share was destroyed. Your shares are still worth $1000 each but now you own a larger piece of the company. This will mean a larger cut of future profits in the form of dividends and greater growth potential in the price of the stock, as future valuations will divide the market cap by 3 instead of 4.

I'm stoned and that seemed like a good way to explain it lol I hope it makes sense.

Edit: and I'm not American but isn't a 401k just a type of retirement account? They're just going to hold index and mutual funds.. those don't 'lag' the market, they're just collections of different equities and bonds.

Go away please, crazy person.

I didn't need you to explain market cap but thanks for the effort, I'm sure it will helpful to someone. The reason I asked you was because I wanted to know your opinion or your angle on the buy back of apple, that is the same angle I took when I wrote the other downvoted comment.

>This will mean a larger cut of future profits in the form of dividends and greater growth potential in the price of the stock, as future valuations will divide the market cap by 3 instead of 4.

The reasoning I used was, Apple isn't a growing company. Its well mature. I don't think we'll be seeing larger future profits in the form of dividends or greater growth potential. I mean with their product range ever increasing in price, I can't imagine they'd be breaking their sales record any time soon. I personally don't see them growing atleast in the next 5 years unless they come up with better innovation and cheaper prices.

The scenario that you explained is perfect for share buy backs of growing companies that are undervalued. They eventually increase value for the investors long term. But if the shares are overvalued keeping in mind its future prospects, and then you buy them back, it hurts the share holders long term. Any fund manager worth his salt will recognize that and will underweight his position at the very atleast. 401k, which like you said are a bunch of mutual funds and ETFs aren't known to be ahead of the curve. Which is what I meant by lag.

At the end of the day all my comments were entirely based upon the fact that I don't see Apple growing. Which is my opinion and I can of course be wrong.

Edit- Fuck. Now you have me doubting. Am I still wrong?

I'm just talking generically, I didn't have Apple in mind, but yes I still think you're incorrect. Reduction of the float is permanent.

I hate Apple's business practices and agree they have peaked. It's been dead to me since the 4S

Sure, its logical to not pay taxes, except its part of an increasingly common tax avoidance scheme.

Earn all money via stocks. Take out loans against those stocks. Never pay the loan back. Repeat the process and those that are uber rich never pay any taxes but have near infinite spending money.

So the rest of us give up 30% of our income and yet those who benefit from these buybacks pay 0.

Alright bud, I'll read some more about it and figure what went wrong. Thanks for taking the time to reply though.

What bank anywhere in the world is giving out loans that don’t get paid back?

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