Neil Cybart: Apple steps back on the buyback accelerator

From a note to Above Avalon subscribers ($) that landed on my desktop Tuesday:

The following totals are for Apple's share repurchases via open market transactions over the past two years.
    • 2Q20: $18.5B spent on buyback. Average repurchase price per share: $71.67.
    • 3Q20: $10.0B. Average repurchase price per share: $79.79.
    • 4Q20: $18.0B. Average repurchase price per share: $106.68
    • 1Q21: $24.0B. Average repurchase price per share: $120.19.
    • 2Q21: $19.0B. Average repurchase price per share: $128.89.
    • 3Q21: $17.5B. Average repurchase price per share: $128.48.
    • 4Q21: $20.0B. Average repurchase price per share: $146.41.
    • 1Q22: $14.4B. Average repurchase price per share: $153.76.
    • 2Q22: $22.9B. Average repurchase price per share: $167.16.

After taking their foot off of the share buyback accelerator a bit in November and December 2021 as Apple shares shot higher in price to $180, management increased its repurchase pace in 2Q21. To be more specific, based on the average price paid per share, Apple ramped buyback as shares declined from $165 to $150 in March. Apple upped its buyback pace by 20%.

At the risk of reading too much into that, one can make an argument that Apple played the market by being opportunistic and taking advantage of AAPL price weakness.

Going forward, it is reasonable to expect Apple to remain bullish on the buyback pace as shares continue to trade around $160.

My take: Cybart neglects to mention that last week he predicted that Apple would increase buybacks by 5%, not the 20% reflected in Apple's 10-Q. Still, I'm happy he's tracking them.

Reminder: Friend-of-the-blog Daniel Tello has offered a year's Apple 3.0 subscription to whomever can make the best case for buybacks over dividends (or vice versa). The submissions we've had so far have been rather perfunctory. None has had the depth or mathematical support Tello requires. See Daniel Tello’s Apple 3.0 essay contest (prize value: $200)

8 Comments

  1. Jerry Doyle said:
    There are lots of gold nuggets in Neil’s note to subscribers in addition to Apple ramping up “buybacks.” It speaks volumes when Apple buys back this many shares of its own company. Companies initiate buybacks to return capital to shareholders. The other reason companies buyback their stock is the belief the shares are “under valued” on the open market. Whole new revenue streams are on the horizon for this company, from transportation, to fintech, to health & wellness, entertainment in addition to its core businesses. Apple knows this better than anyone. Thus, Apple ramps up its buybacks to acquire as many undervalued shares now as possible. Apple’s long term stock price trajectory is one way: higher.

    6
    May 4, 2022
  2. Robert Paul Leitao said:
    Looking at the chart, what’s not included in the numbers are the $5 billion deployed by Apple in FQ3 21 for ASRs or Accelerated Share Repurchases and the $6 billion deployed in FQ1 22 for ASRs. When these cash deployments are added to the quarterly totals, Apple’s pace of repurchases appear to be more consistent through the quarters. Adding these amounts to the repurchase activity per Apple’s capital return report increases the FQ3 21 total to $22.5 billion for buybacks and $20.4 billion in FQ1 22.

    3
    May 4, 2022
  3. Michael Goldfeder said:
    @Joseph: So if dictating is out, how about buying a Donna a pair of “Beats”headphones in the color of her choice? That way she wouldn’t be annoyed, receives a great device, and everyone on Apple 3.0 benefits from having you more engaged while still resting from your recent surgery.

    Moreover, it will also double up as a real impressive Mother’s Day present !

    A win win all the way around. Luca already gave his approval and I’m certain the subscribers on this platform will agree too!

    2
    May 5, 2022

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