Buyback Time 💸

Table of Contents

Buyback Time

I’m sure everyone has purchased stock here, either through a brokerage account or Fantasy Finance. Funds on Wall Street have also purchased stock multiple times, and foreign investors too. However, did you know that companies can buy their own stock, too?

This happens through the process of a stock buyback. Simply put, companies repurchase their own shares with its cash and cash equivalents, essentially reinvesting. Since they are buying their own stock, the number of outstanding shares, or the amount that a company has issued, goes down. This increases the stake of each investor into the company, including insiders. You may be asking, why would a company buy their own shares? A share buyback often means that the company is confident in themselves, and they feel that their share price is at a discount. Stock buybacks also improve financial ratios such as the P/E ratio and earnings per share, which is also enticing for a company.

The announcement of a buyback usually sends the share price of a stock soaring, which is exactly what happened on Tuesday. AMD, one of the largest semiconductor businesses, unveiled their 4-billion-dollar buyback plan, the first for two decades ago for the company. Like most buybacks, this was going to be funded by cash, and it comes after one of the greatest recoveries in the business world for AMD, led by CEO Lisa Su. Ever since she took the role, she has grown the company into a competitor to Intel, and this growth has allowed for the buyback to occur. AMD could be sensing that their share price is oversold, with the company’s stock down nearly 20 percent from its high. This sent the share price up nearly 5 percent in a matter of minutes, leaving AMD positive on a day where the markets were in a bloodbath.

With economic projections looking promising, many companies are considering buybacks too.  April saw 208 million dollars’ worth of stock buybacks from companies, and low interest rates are certainly contributing. Banks will also look forward to regaining the ability to perform buybacks in June, which was shut down last year by the Fed. What do you think about stock buybacks?

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

Share:
More Posts
Market Recap – September 28th 💰

After the 10-year Treasury yield bond fell off from its 15-year high, investors added some value back into the market, focusing all short-term attention on Friday’s PCE price index reading.

The Crude Oil Bust 🛢

Surging global crude oil prices, driven by factors like OPEC+ production cuts have pushed U.S. West Texas Intermediate futures to over $95 per barrel.

Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community. The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results. Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such. Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.