What is a share buyback?
A share buyback, also known as a stock repurchase, occurs when a firm buys its own stock either directly from shareholders or on the open market. The company then usually retires the stock, reducing the number of shares in circulation. The buyback is a way of returning surplus cash to shareholders.
Key takeaways
A share buyback, also known as a stock repurchase, occurs when a company purchases its own stock directly from shareholders or on the open market and typically retires those shares, reducing the number in circulation.
Companies use share buybacks as a method to return surplus cash to shareholders rather than distributing it through other means.
Following a buyback announcement, share prices often increase significantly as markets adjust to the reduced number of shares in circulation, thereby boosting the value of existing shareholders' holdings.
Where have you heard about a share buyback?
As an investor in stocks you might have experienced a share buyback in a security you own. When the buyback is announced, you’ll often see a significant increase in the share price as the market adjusts to the reduction of stock in circulation, boosting the value of your holding.
Where have you heard about a share buyback?
As an investor in stocks you might have experienced a share buyback in a security you own. When the buyback is announced, you’ll often see a significant increase in the share price as the market adjusts to the reduction of stock in circulation, boosting the value of your holding.