From Jordan Novet's "Tech sell-off pushes Nasdaq to steepest drop since June 2020" posted Thursday on CNBC:
Cloud companies, e-retailers and household tech names got hammered on Thursday, wiping out hundreds of billions of dollars in market value and pushing the Nasdaq Composite to its worst one-day plunge since June 2020.
A day after the Federal Reserve raised its benchmark interest rate by a half point in a bid to stem rising inflation, investors sold out of the part of the market that’s generally viewed as the growth driver, on concerns that the economy is in for some dark times ahead.
Big Tech suffered a massive sell-off, with Amazon dropping almost 8% and Facebook owner Meta Platforms off about 7%. Among other big names: Apple fell nearly 6%; Google parent Alphabet declined about 5%; and Microsoft shares slid 4%. Overall, the Nasdaq plummeted 5%.
Investors were particularly down on e-commerce after Shopify, which ballooned during the pandemic by helping physical retailers go digital, reported disappointing first-quarter earnings and revenue. The stock tumbled 15%. Ebay and Etsy also suffered double-digit drops following their earnings reports.
Cue the video:
My take: Is Apple, the company, worth less today than it was on Wednesday?
Interesting point you raise! Would Warren Buffett prefer dividends to buybacks? Here’s his take:
fool dot com dot au/2021/03/02/heres-why-warren-buffett-prefers-buybacks-to-dividends/
Replace the “ dot “ with a “.”.
I might add that doing buybacks removes gamblers from the float automatically, leaving a higher percentage of longs behind….
Apple buys on the open market. I divide purchasers into short, medium and long term investors. Long term investors (think Warren Buffett) won’t typically sell, so Apple will be buying the vast number of shares from medium term “traders” and short term “gambler”. The gamblers are in and out of the stock while the traders will buy and sell far less frequently.
Over the years, a LOT more stock has been removed from the float than added (by Apple as, for example, when they fill stock options). I don’t know the exact figures, but it doesn’t take a genius to see that much of the stock being bought by Apple comes from short term traders.
You can see the impact of this on the aplit-adjusted volume of shares being traded now as opposed to a decade ago when Apple started its massive buyback program. At this time, the split-adjusted volume is down to about 1/5th of the volume back then – in spite of at best half the shares having been bought back (haven’t run the figures for a couple of years).
Pretty basic insight, really.
FYI: Someone correct me if I’m wrong, but I seem to remember that when Apple started buybacks they also changed their employee stock plan so that instead of issuing new shares they buy back employee awarded shares on the open market. That means the number of issued shares in circulation always goes down (the buybacks), while some of the issued shares are bought by Apple and moved into employee hands but not taken off the books. I believe there is a line item in their financials related to company funded share buyback for employee compensation. (I’m too lazy to look for it.)
Apple is a fan of its fans, which includes ALL its investors, big and small. For smaller investors like Donna and I, buybacks are FAR superior to dividends. And it has yet to be proven to my satisfaction that the same isn’t true for even the largest investors. Like Warren Buffett, for instance.
Did you read the Buffett article I posted above in favor of buybacks over dividends as a generator of wealth? He’s basically saying Apple has given you more wealth than you would have received from dividends.
Is this blog about Apple or Big Energy? I have at least as many opinions on Big Energy – probably more – than I have on Apple….
I make no bones about our being invested in a single company. Aside from a rocky start that finally ended when buybacks started, it has been an excellent strategy.
Period. End of Discussion.
I can’t do the work to give you an answer for a couple of reasons: (1) my presently disabled arm and (2) a major project deadline looming. But I’ve told folks how to find out in my comments to PED’s story here:
ped30.com/2022/04/30/apple-tello-essay-buybacks/