Apple Spent $86.4bn Buying Back Stock in a Year and Shrank Its Share Count by 1.6%

Apple Spent $86.4bn Buying Back Stock in a Year and Shrank Its Share Count by 1.6%

Apple now has 14.53 billion shares outstanding. The peak around 2013 was roughly 26.2 billion, so the count has fallen by more than 40% in thirteen years. No splits, no mergers, just shares bought back from the market and cancelled.

The effect on earnings per share is direct. The denominator keeps shrinking, so EPS grows faster than profit does. If a company's net income were flat for a decade, cutting the share count by 40% would still lift earnings per share by about two thirds.

■ But the same money buys back fewer and fewer shares

Over the past year Apple spent about $86.4bn on buybacks, close to a record. In that same year the share count went from 14.77 billion to 14.53 billion, a fall of 1.6%. The pale blue line on the chart has visibly flattened, and this is why: the higher the share price, the fewer shares the same budget retires.

So a falling share count is not good news by itself. What matters is the price paid. Money spent near the highs and money spent near the lows mean very different things for a long-term holder, and this chart cannot tell them apart.

Source: Apple annual report and company filings (Image: @charliebilello)