Buybacks

Buybacks refer to the process by which a company repurchases its own shares from the marketplace. This can lead to a reduction in the number of Outstanding Shares, often resulting in an increase in the Share price and Earnings Per Share (EPS) for remaining shareholders. Companies may initiate buybacks for various reasons, including to signal confidence in their financial health, to improve financial ratios, or to return excess cash to shareholders.

Examples:

• In 2020, Apple Inc. announced a buyback program worth $100 billion, allowing it to repurchase shares and support its Stock price during market volatility.
• In 2019, Boeing conducted a buyback program as a strategy to utilize its excess cash, which was later adjusted due to the impact of the 737 Max crisis.

Cases:

• During the COVID-19 pandemic, many companies halted their buyback programs to preserve cash, highlighting the strategic decision-making behind buybacks.
• In 2018, the Tax Cuts and Jobs Act in the United States led to an increase in buyback announcements as companies sought to take advantage of lower corporate tax rates.