Investment is a delicate matter. Even if you think you understand the securities market and 100% confident in the further growth of certain companies, it may be an unexpected drop and you will lose a fair portion of their investments. Exactly such a misfortune was waiting for Apple, which decided to invest spare cash in their own shares, but instead to spur the growth of their value lost in this deal a few billion dollars.
According to The Wall Street Journal, buying its own shares in the period of growth in their prices, Apple has lost more than $ 9 billion after they experienced a fall. In total the company has invested in the buyback of about 63 billion dollars, of which retained a little more than 54 billion, says The Wall Street Journal. It follows that the average Apple overpaid for each valuable paper of no less than $ 50 losing at the peak of even more than $ 70.
The repurchase of shares
“When the [stock] market is gaining momentum under the impact of the new tax rules adopted in December 2017, the company bought back their shares at a furious pace. The new law has enriched the company by reducing the tax rate from 35% to 21%, and thus simplified to companies like Apple translation in the United States of income earned abroad,” reports The Wall Street Journal.
What is the buy-back
Buy-back or share repurchase is absolutely normal market procedure practised by public companies to reduce the amount of marketable securities. Often it is a forced measure, aimed at creating an artificial shortage and, consequently, enhanced shareholder value. But often, the purpose of reverse repurchase is the distribution of excess cash, which have no other use. So was the case with Apple.
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