At a certain point in a company’s development, it reaches a growth plateau, at least one that ceases to be sufficiently attractive to some investors. At this stage, companies resort toThese mature companies use their excess cash reserves from entrenched market positions to signal confidence to shareholders. For buy-and-hold investors, share repurchases represent a boon because the tax liability is deferred until they sell the shares, which are then subjected to capital gains tax.
Although lower than the $24.1 billion in the year-ago quarter, Apple leadership decided to bolster shareholder confidence with a record-breaking $110 billion for additional share repurchases, representing 3.9% of the total shares outstanding. Buffett also noted that for a company to keep doing that, it has to have a wide-spread ecosystem and sticky products, which fits the bill for Apple. Most recently, the company reported a rebound in iPhone sales. At the present price of $191.92, AAPL stock is nearing its 52-week high of $199.62 per share, while the average price target twelve months ahead is $206.52, per Nasdaq data.
Meta left the quarter with $58.12 billion in cash and cash equivalents. During the quarter, Meta repurchased $14.64 billion worth of stocks while paying out $1.27 billion in dividends. Taking the cue from other Big Tech giants, Meta authorized a $50 billion share buyback program at the end of January.
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