Apple spends a record $23.8B buying back its own shares — and saving cash in the process

Apple bought back $23.8B of its shares last quarter, a new record.


June 26, 2019

Apple spent $23.8B buying back its own shares this past quarter, more than double the next biggest buy-backer in the S&P 500, Oracle (which spent $10B), Axios reports.

Even for Apple — which is responsible for 8 of the 10 largest stock buybacks in business history — this was a new record. 

So, why does Apple want to buy back its stocks so badly?

Buybacks are flexible and they reduce tax responsibilities

By buying back stocks, Apple reduces the number of shares on the market, increasing the value of its remaining shares.

It’s a cheaper way to pay shareholders than issuing dividends: Unlike regular dividends, Apple issues buybacks whenever it feels like it.

Plus, buybacks enable Apple to get rid of cash it would otherwise pay taxes on, boosting stock prices AND warding off the tax man. 

But buybacks are also controversial

Critics like Bernie Sanders argue that buybacks — which have increased dramatically in recent years and sucked up 54% of total earnings in the S&P 500 between 2003 and 2012 — elevate inequality by concentrating wealth with shareholders. 

Wall Street equity analysts, on the other hand, insist buybacks are just good business.

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