Apple’s approval of its biggest-ever, $110 billion stock buyback has investors very excited — so excited that they’re willing to overlook its weak iPhone sales. Immediately following Apple’s announcement of the share repurchases in its fiscal second quarter earnings report, its stock price surged as much as 8% in after-hours trading.
The company has spent the most of any tech company on stock repurchases over the last decade, doling out $650 billion since 2012. Buyback programs are a value-add for investors, reducing the number of a company’s shares in circulation and thereby raising an investor’s return on future dividends.
Apple’s board also raised its cash dividend by 4% percent. The company reported sales of $90.8 billion in its second-quarter earnings, surpassing Wall Street’s more modest expectations. CEO Tim Cook said the tech giant recorded its highest-ever revenues for its Services division (i.e. Apple subscriptions).
While Apple’s sales surpassed forecasts, revenues are still down about 4% compared to the same time last year. iPhone sales are down even more (10%).
The tech giant has had a rough 2024 so far. Its weak iPhone sales abroad, antitrust concerns, and rocky stock performance have all been causes for concern for investors.
The tech company’s shares have fallen 10% year-to-date as Apple dealt with regulatory scrutiny at home and abroad as well as an iPhone sales slump in China. The Department of Justice in March sued Apple for allegedly creating an illegal monopoly in the smartphone market, prompting a tumble in Apple’s stock price — so steep that it lost over $100 billion in value in a single day. And demand for iPhones in China hasn’t been as weak as it is now since the beginning of the COVID-19 pandemic.
But analysts still have faith in Apple. Researchers at Bank of America, Wedbush, and Morgan Stanley all advised buying Apple shares in recent notes to investors, placing their price targets for the stock between $210 and $250.
Apple stock is still up about 2.5% year over year.