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 Shares/">Outstanding Shares, often resulting in an increase in the Share price and Share/">Earnings Per Share (EPS) for remaining Shareholder/">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 Shareholder/">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.