5 ms·
The author of this paper clearly doesn't understand the economics of stock buybacks. They are simply a tax efficient means of returning cash to shareholders, s
by maxcan 8y ago
The author of this paper clearly doesn't understand the economics of stock buybacks. They are simply a tax efficient means of returning cash to shareholders, something Apple definitely has needed to do for a while.
- johnwheeler 8y agoNot to mention they make 60+ billion a year after tax. So, they're valued at less than 20x earnings, which is actually low compared to the rest of the FAANGs
- horsecaptin 8y agoWhy isn't their P/E higher? Are all the institutional investors maxed out on how much Apple they can buy?
- slededit 8y agoWith a $1T valuation and a shrinking stock market as a whole that's not an unreasonable explanation.
- johnwheeler 8y agoBecause they don't have flying cars of course :-P In all seriousness though, 20 is not a low P/E. It's just that AMZN's 170 P/E is very, very high. Facebook and Google are in their 20s I believe. If AAPL were trading at 10x or 12x earnings, that would be low, but still not insanely low.
- horsecaptin 8y agoGoogle's P/E is in the 50s, just like Microsoft. Facebook is 28. Pretty much every successful tech stock is way more expensive than Apple.
- repsilat 8y ago> returning cash to shareholders Just to emphasise this point more: to first order, a buyback of $n of stock reduces Apple's market cap by $n. Apple would have hit a trillion much sooner had it not bought back so much stock. This article is hilariously off-base.
- ohiovr 8y agoUntil the stock price goes down the drain like it did with RIM. They could have just issued larger dividends and investors would have something to show for it.