Apple is making it rain after a monster 3 months
Apple unveiled its results for the first quarter of 2021 and it's fair to say it made some serious bank y'all
What's the key learning?
- Apple has decided to buy back some of its shares to reduce the number available on the open market
- By reducing the amount of shares available, Apple can limit the likelihood of other shareholders buying and taking control of the company
- By limiting the supply, the value of the shares are likely to go up
HOW DID APPLE DO SO WELL DURING A PANDEMIC?
Sales managed to stay strong for Apple, as people had nothing better to do than online shop - and shop they did!
Sales in China almost doubled. That'd be over $8B more in iPhone sales than expected in just 3 months!
Last quarter was so good for Apple that it announced a monstrous $115 billion share repurchase... aka a “share buyback”.
SO, WHAT IS THE KEY LEARNING HERE?
A share buyback is when a company buys its own shares in order to reduce the number of shares available to everyone else.
Companies buy back their own shares for a few reasons:
Reason 1: By reducing the number of shares available in the open market, companies can prevent other shareholders from buying so many shares that they take control of the company.
Reason 2: The company can increase the value of each share... juuust basic supply and demand at play here.