Stock Buyback/Repurchase



Next video:
Loading the player...

A stock buyback, or repurchase, occurs when a company buys its own shares off the market and therefore reduces the amount of stock outstanding.

It can do this in one of two ways: The company can either buy shares at current market prices or tender a fixed-price offer to current shareholders.

The primary benefit of a buyback is the price appreciation investors usually see after the transaction. When the supply of stock available to the general market suddenly becomes smaller, each share is worth more.

Related Articles
  1. Products and Investments

    Weighing the Pros of Stock Buybacks vs. the Cons

    In recent years, the value of stock buybacks has come into question. Here we break down the trend and weigh the pros and cons of share repurchasing.
  2. Investing

    4 Reasons Why Investors Like Buybacks

    From a financial perspective, buybacks benefit investors by improving shareholder value, increasing share prices, and creating tax beneficial opportunities
  3. Markets

    6 Bad Stock Buyback Scenarios

    Buying back shares can be a sensible way for companies to use extra cash. But in many cases, it's just a ploy to boost earnings.
  4. Stock Analysis

    Stock Buyback Report: Was it a Smart Strategy in 2015? (AAPL, MSFT)

    Find out the story behind company stock buyback programs and how some of the larger stock buybacks of 2015 have fared for shareholders.
  5. Professionals

    Are Stock Buybacks Always Good for Shareholders?

    Stock buyback programs aren't always done with the interests of shareholders in mind. It's important to try to understand the motivation behind such moves.
  6. Investing Basics

    How MasterCard Pulled Off a Buyback

    Stock buyback refers to publicly traded companies buying back their shares from shareholders. Why would they do that?
  7. Investing Basics

    The Impact Of Share Repurchases

    Share repurchases can impact investors and companies in different ways.
  8. Economics

    How Buybacks Can Hurt Sharholders

    Buybacks can hurt shareholders in several ways.
  9. Sectors

    The Share Buyback Report: The Technology Sector

    Watch for a stock's share price to respond favorably at the outset of a share buyback program before assuming that gains will follow.
  10. Investing Basics

    Why Buybacks Might Spell Bad News for Investors

    Buybacks have helped drive stocks higher since 2009 and have accelerated in 2016. Is this still good news for investors?

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center