Apple Inc. may be delivering bigger than expected stock buyback due to overseas cash brought back to U.S. This can also result to investor angst being pacified after the iPhone X sales’ not so good performance.
The recently passed Trump tax reform gives U.S. companies the opportunity to bring back overseas cash at tax rate of 15.5 percent. This is considerably lower when compared to the 35 percent tax rate pre-tax reform.
Apple is the holder of the most overseas cash with around $250 billion.
Analyst Steven Milunovich predicted that Apple might have more of its own stock available for repurchase after paying taxes on overseas cash. He estimates that this could amount to $25 billion.
“Apple clearly is a beneficiary of overseas cash repatriation,” said Milunovich. “Including regular free cash flow, we figure there could be $122 billion available over a two-year period (through 2019) or 14% of the market cap while maintaining a net cash position of $90 billion.”
The analyst stated that the buyback needs to “limit any potential stock downside.”
Speculations over iPhone supply cahin-cuts were made.
Apple dropped to 174.35 on today’s stock market.
Spotify will go Public
During the final weeks of 2017, Spotify filed to go on public on the New York Stock Exchange. This was reported to be the company’s highest profile test as of yet. It is a kind of trading technique which will give companies the opportunity to “list shares without raising money through traditional stock.”
The streaming app now has over 70 million subscribers. With this, Spotify makes it seems that venture capital funding is no longer needed. Regardless, the company is pursuing a “direct listing” of its shares. They decided to bypass the more traditional approach of initial public offering (IPO).
With the direct listing, Spotify will evade initial fundraising. At the same time, existing investors and insiders will have the opportunity to trade their shares on the open market.