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Apple (NASDAQ:AAPL) rose nearly 6% on Friday, as investors cheered the iPhone maker's latest earnings results and the announcement of a $110 billion stock buyback. The company also increased its dividend.
Although the Wall Street community at large welcomed the news, Seeking Alpha analysts had a more mixed view, with multiple bearish reactions to the news. Here are some of the key points made by the SA authors:
- Livy Investment Research on Apple's disastrous Q2 2024 results overshadowed by $110 billion buybacks: “Despite Apple's currently huge installed base of devices, lack of ai integration introduces incremental risks of loss of market share to competitors… We see continued employment of generous equity by Apple “Buybacks are a critical tool for the stock to weather the near-term headwinds facing its underlying fundamental outlook. However, the durability of its valuation premium at current levels remains at risk, given the lack of support from favorable returns from growth investments.”
- Victor Dergunov on Apple: Growth issues masked by buybacks and dividends: “Apple has been dead money for years. Its shares are still trading around the same level we witnessed in 2021, several years ago… While dividends and buybacks “may support Apple's stock price in the near term, its shares could move sideways while its growth outlook remains cloudy.”
- The Asian Investor in Apple: Accelerating Returns on Capital: “The most compelling element of an investment in Apple is that the company is earning a ton of free cash flow that will be returned to shareholders through a very generous investment program.” $110 billion share buyback. With shares trading below fair value and the company set to buy back approximately 4% of its outstanding shares, I believe a rating upgrade to strong buy is warranted, despite the presence of negative revenue growth in the second quarter of 2024.”
- Cavenagh Research on Apple: Expect Smart Money to Sell $110 Billion Buyback Euphoria: “Despite these impressive headline numbers, underlying business trends raise concern: Apple saw a decline in its business compared to the same quarter in 2023, with a notable decline in iPhone sales. Additionally, the future of Apple's potential growth drivers, specifically the Vision Pro and GenAI initiatives, remains uncertain and possibly unconvincing.”
