(5 November 2020) Restrictions on many economic activities, especially those requiring in-person engagement, due to the COVID-19 pandemic coupled with extremely low interest rates and multi trillion stimulus provided by US Government and Federal Reserve resulted in unprecedented growth of tech stocks in recent months. Stock prices of Amazon, Facebook, and Apple are all outperforming the market by 10s of percentage points.

Investors are treating tech giants as a safe haven through the current crisis, but are tech giants' stock really investment safe havens? A closer look at fundamentals can help answer this question. Let's take closer look at Apple as an example. Data on financial statements collected by Graviton point to strong income and balance sheets, which together with sizable share buybacks and the launch of new products and digital services, support Apple's current stock price.

  • Despite the ongoing COVID-19 pandemic and high economic uncertainty results for the third financial quarter of 2020 are encouraging.  Apple announced revenue of $59.7 billion and net income of $11.3 billion, the equivalent 11% and 12% year-over-year growth, respectively.
  • To refinance old debt and buy back stock, Apple continues to increase it debt through issuing bonds at record low rates. In FQ3 2020, Apple's total debt amounted to $113.4 billion, which is $5 billion more than in the same period one year ago.
  • Apple's share buyback strategy helps to increase earnings per share and return capital to shareholders. Through the first three quarters of the 2020 fiscal year, Apple spent $55 billion on share buybacks, which is $10 billion above profits.

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