On April 22 Apple shook the investing world by announcing some major changes to how their stock would be floated on the public market. For starters, they decided to engage in a 7 to 1 stock split, lowering the cost of an individual share by one-seventh while adding an addtional seven shares for every one currently on the market. This move will have momentous effects on the how the stock is traded, increasing volatility but also increasing attraction from retail (i.e. not institutional) investors.
The other big change was that Apple decided to buy back $30 billion worth of shares, taking them off of the market. But what excatly does this mean? In this video, Education Unlocked explains why companies engage in share buybacks, how they change the value of a stock like Apple's, and the advantages and disadvantages of engaing in a large repurchase program.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer