What is a Stock Buyback?
Definition
A share repurchase or buyback is a decision made by a company to buy back its own shares from the marketplace.
Meaning
When a company buys back its own stock, it is essentially reducing the number of shares available on the open market.
How it Works
A stock buyback is a transaction in which a company uses cash to buy some of its own shares of stock on the open market.
Benefits
Companies may choose to buy back their own stock for a number of reasons, including:
- To increase earnings per share
- To reduce the number of shares outstanding
- To reward shareholders
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