Apple’s announcement of the biggest stock buyback program in U.S. corporate history led to a surge of 6% in its share price on Friday. Investors rejoiced at the news, believing that the buyback program would have a positive impact on the company’s stock value.
Despite the optimism surrounding Apple’s $110 billion stock buyback program, historical data suggests that share repurchases may not always lead to substantial stock performance. RiskReversal Advisors principal, Dan Nathan, pointed out that Apple has been consistently buying back shares over the past three years, yet the stock has still underperformed the market.
Apple’s stock is still down year-to-date, even after the recent bounce following the announcement of the buyback program. This disappointing performance has caused some investors to question the effectiveness of share repurchases as a means of boosting stock value.
Apple’s stock has also been underperforming compared to some of its Big Tech rivals, further raising doubts about the impact of the buyback program on the company’s stock price. The decision to invest in the stock market rather than repurchasing shares has been a topic of debate among investors.
The underperformance of the Invesco Buyback Achievers ETF, which includes companies that have reduced their outstanding shares, compared to the S&P 500 ETF highlights the challenges companies face in using buybacks to drive stock value. The top holdings in the ETF have also underperformed the broader market, indicating a broader trend in the market.
Overall, while Apple’s stock buyback program has generated excitement among investors, historical data and market trends suggest that the impact on the company’s stock performance may not be as significant as initially anticipated. As the company continues to navigate the challenges of the market, it remains to be seen whether the buyback program will be able to deliver the desired results in the long run.