No, I didn’t! Is that on their investor relations page?
Nope, you need to look on SEC.GOV
But why file it on a Friday night?
I guess, no time to waste if you want to sell $10bn.. but I’m sure they weren’t hoping it got buried in the weekend news …
So filed alongside their Q & a few director sales…
48hrs after their results
Good point, did they mention any capital raising in their results or the call?
No, quite the opposite – the CFO reminded investors that,
“We have $7 billion available in recurrent authorization for repurchases. We did not repurchase anything in this last quarter, but we do repurchase opportunistically. And we’ll consider that as we go forward as well.”
So now we all know – they also “sell opportunistically” …
Do they need the cash?
Nope, they have $15bn in cash & marketable securities
And they said capex is only expected to be $300m – $350m this quarter
And if demand is as strong as they say it is, that cash balance should grow with all these AI profits people are now “baking” in
So what’s going on?
I think management watched their share price rise by the market cap of Fedex + Heineken + Colgate Palmolive + Yum Brands in a few hours & thought,
“When the ducks quack, feed them”
I can’t fault them, it’s entirely rational
They warned everyone on the call, “Regarding competition, we have competition from every direction. Start-ups really-really well-funded and innovative startups, countless of them all over the world. We have competition from existing semiconductor companies. We have competition from CSPs with internal projects…And so, — we get competition all the time.”
Do you remember Elon “fed the ducks” $5bn in December 2020 & another $5bn in January 2021
And here we are, over 2 years later & the share price is down around 30%
Those “ducks” can’t be happy..
Anyway, it makes financial sense because they’re issuing these shares on a PE of 127 or earnings yield of 0.77%
So if you “borrow” at 0.77% and open an Apple Pay account and earn 4%, guess what?
You earn $400m of interest income and grow EPS
that they’ll need that if all that competition kicks in..
or raise guidance if they don’t – possibly excite more “ducks”
But remember it increases the supply of shares & maybe halts the demand so spare a thought for those who spent $66bn buying shares the past 2 days – this won’t go down well!
And if the company is issuing shares, you can bet management wants to exercise every vested share option they can…
So what’s your point?
Look, the guys who run the business, who understand the AI potential better than any of us – i.e the “smart money”, is selling
So maybe, it’s time we all calmed down about AI because when the smart money goes from “opportunistic repurchasing” to “opportunistic selling”, within 48 hours,
You don’t want to be a “stupid duck”