Share buyback will reduce the company's total number of shares outstanding and the total amount of cash on the company's balance sheet. In general, share buyback tends to increase the price of the stock not only due to the reduced supply of shares but also the buyback will boost earnings per share and drive down the price-to-earnings ratio, a key benchmark investors use to value a company. If the company has strong cashflow and its shares are undervalued, share buyback can be a good way to reward shareholders. With the US market $Dow Jones Industrial Average (.DJI.US)$, $Nasdaq Composite Index (.IXIC.US)$, $S&P 500 Index (.SPX.US)$ hitting record highs this year, share buyback by global giant companies  $Alphabet-A (GOOGL.US)$, $Apple (AAPL.US)$, $Bank of America (BAC.US)$ , $Meta Platforms (FB.US)$,  $JPMorgan (JPM.US)$, $McDonald's (MCD.US)$, $Microsoft (MSFT.US)$, $Netflix (NFLX.US)$, often cited as a key support for US stocks could lift investor hopes by driving the market even higher. The main drivers of the share buyback are excess cash on balance sheets and positive sentiment on the back of healthy financial performance. While companies buying back their own shares can support higher stock prices , they run the risk of overvaluing stocks. Investors should proceed carefully if the buyback seems to be motivated by the management's desire to improve its valuation metrics rather than returning value to shareholders. Companies that use buyback to give the impression of rapid growth in earnings per share may not be worth investing in. Among the companies participating in share buyback, I am most bullish on $Apple (AAPL.US)$, one of Warren Buffett's all time favourite stocks. Its strong brand and innovative design expertise has allowed $Apple (AAPL.US)$ to build one of the most loyal customer bases in the world and generate earnings that beat its competitors in the mobile computing market. Not only that , $Apple (AAPL.US)$ has used its dominant position in mobile to build a largely profitable software ecosystem. Even better, $Apple (AAPL.US)$ pays consistently higher dividend and shareholders can anticipate a huge payout growth in the long term.

Global giant companies have started a massive war of share buybacks. Since the beginning of 2021, $Meta Platforms (FB.US)$ , $Apple (AAPL.US)$ , $Alphabet-A (GOOGL.US)$ , $Microsoft (MSFT.US)$ and $McDonald's (MCD.US)$ launched share buyback programs that breaks the record.
What is a stock buyback? Is it good or bad? Will it influence our investing decision？Let's take a closer look.
What is a stock buyback?
A stock buyback refers to a company's purchase of shares of its own stock from shareholders, reducing the number of shares on the market and increasing the value of remaining shares.
Why does a company buyback its shares?
Buying back shares is one of the easiest ways for a company to create value for its shareholders. Hereare some potential reasons for a company to buyback:
1. The stock is undervalued.
2. The company has too much cash on hand.
3. Management is confident about future operations.
4. A buyback is more tax-friendly than a cash dividend.
5. Limited opportunities to invest (other than itself).
6. Try to support the stock price (just try).
What are the effects of shares repurchase？
1. Reduce shares outstanding
When shares are repurchased by a company, these shares are no longer outstanding and the total number of shares outstanding in that company is reduced accordingly. Hence, if the company decides to cancel the repurchased shares, the ownership of each share will automatically increase.
According to Buffett, shareholders will benefit when the company's revenue continues to expand but the number of shares outstanding continues to decline.
2. Increase earnings per share (EPS)
Shares repurchase also has an effect on increasing earnings per share. Imagine, if a company buys back half of its shares and keeps total earnings the same, earnings per share will double. As we know:
3. Push up the stock price
Stock Price = PE * EPS. If a stock's PE ratio hold still and EPS goes up (due to repurchase), its stock price will go up eventually.
What are the risks involved?
Every coin has two sides, just as not every share buyback is perfect.
Although share buybacks will drive up some financial ratios (i.e. EPS, ROE, ROIC), the value is not created through organic growth (increasing output and enhancing sales internally). Relying too much on buybacks may not be a permanent arrangement.
In addition, if a company decides to buyback when the stock price is extremely overvalued, the buyback may harm shareholder's interest.
A real-world example: Apple
Apple is one of the biggest repurchase player in the human history. Since beginning to repurchase shares in 2013, Apple has spent $460 billion to buyback its shares.
The market cap of Apple is 2.43 trillion USD, about 4 times of that of 2016. However, the stock price of AAPL increases more than 500% during the same peroid. Without saying, the share buyback adds up the long-term value of the stock.
Besides the current stock price, the share buy back changes the financial statement of Apple. Since 2016, the time that Buffett starts buying, the EPS of Apple keeps a higher growth rate than its net income.
Apple's buyback program boosts the overall effectiveness of its operation. In the past 5 years, the return on equity (ROE) of Apple rockets massively, from 36.9% in 2016 to 73.69% in 2020, showing that it can pile inactive cash into shareholder's value at a record level.
What's your takeaway?
Will share buybacks influence our buying or selling decisions? Which stocks do you favor the most?
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$Futu Holdings Ltd (FUTU.US)$
share buyback plan annouced. make sense to do when the stock is under valued
https://ir.futuholdings.com/news-releases/news-release-details/futu-announces-us300-million-share-repurchase-program

Global giant companies have started a massive war of share buybacks. Since the beginning of 2021,global giant companies like Facebook, Apple, Google, Microsoft, and MacDonald launched share buyback programs that breaks the record.
What is a stock buyback? Is it good or bad? Let's take a look at mooers' amazing views.
A Boon or a Bane?
@Syuee said:
As with many things in investing, the answer isn't well-defined. If the company genuinely has cash to spare, and its shares are arguably undervalued, then a buyback can be a good way to generate benefits for shareholders.
But if, its shares are expensive, it's worth asking why the company isn't choosing to pay a special dividend to its shareholders instead … or hanging on to the cash for a rainy day?
Generally, re-distributing wealth has been viewed positively by investors. This can come in the form of dividends, retained earnings and the popular buyback strategy.
Pos of stock buybacks for investors
- Boost in share prices
- Rising dividends
- Better earnings per share
- Less excess cash
- Positive psychology
Cons on stock buybacks for investors
- Poor predictions
- Sinking dividends
- Poor use of capital
- Management self-interest
- Cover for stock handouts
Click to see >>
Mooers believe stock buybacks are positive signs
@Johannpee said:
Short positives
Buying back shares is usually meant to affirm the market on the company beliefs to its future and influences the retail behaviour to follow suit. Personally I see it as a positive to a favorable outcome. A short term one. Having said, take caution to follow suit when a company's share price has made a sudden dip. Also, C-suite buying back shares may constitute a sudden pump and dump where you won't want to be trapping your money with their shares. Click to see>>
The “plus” points
@HuatEver is in favour of stock buyback or stock repurchase, because it is an effective utilisation of a company's excess cash flow, a decrease in the number of shares lying around in the market, and a positive reward for the shareholders who will be allowed to purchase the company's stocks at a reasonable prices. Click to see>>
A great example
Among the companies participating in share buyback, @HopeAlways most bullish on $Apple(AAPL.US)$, one of Warren Buffett's all time favourite stocks. Its strong brand and innovative design expertise has allowed Apple to build one of the most loyal customer bases in the world and generate earnings that beat its competitors in the mobile computing market. Not only that , Apple has used its dominant position in mobile to build a largely profitable software ecosystem. Even better, Apple pays consistently higher dividend and shareholders can anticipate a huge payout growth in the long term. Click to see>>
There are also voices that a buyback is not necessarily good for investors
As @NANA123 said:
The world of capital is very complicated
First of all, it depends on the strength of the repurchase. The price depends on the game between buyers and sellers. The more you buy in, the easier for rising. On the contrary, with a daily turnover of more than one billion, but millions of buyback for a stock, which has no effect on the trend of the stock price.
Sometimes, the purpose of buyback is not simple. Major shareholders want to reduce their holdings, but the stock price has fallen sharply. At that time, it’s not worthwhile to reduce their holdings. Therefore, it throws out a buyback plan to stabilize the stock price.
In fact, there are many reasons that affect the company's stock price. Even if the price is undervalued, it’s difficult to repair it by repurchase. For the market, buyback conveys good news and gives investors confidence. But it can only be used as a bonus item rather than trading standards. Click to see >>
Buybacks vs Split shares
Last but not least, @Ermmmmm raised a very interesting question:
Companies also like to split shares. So which is greater at work here (buybacks vs split shares)? Click to see >>
Got an answer in mind?
Feel free to leave your valuable comment below!
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Pros of stock buybacks for investors
- Boost in share prices
- Rising dividends
- Better earnings per share
- Less excess cash
- Positive psychology
Cons on stock buybacks for investors
- Poor predictions
- Sinking dividends
- Poor use of capital
- Management self-interest
- Cover for stock handouts
Are share buybacks good or bad?
As with many things in investing, the answer isn't well-defined. If the company genuinely has cash to spare, and its shares are arguably undervalued, then a buyback can be a good way to generate benefits for shareholders.
But if, its shares are expensive, it's worth asking why the company isn't choosing to pay a special dividend to its shareholders instead … or hanging on to the cash for a rainy day?
Generally, re-distributing wealth has been viewed positively by investors. This can come in the form of dividends, retained earnings and the popular buyback strategy.
I personally favour $Berkshire Hathaway-B (BRK.B.US)$  $Berkshire Hathaway-A (BRK.A.US)$. It appears to have bought back about $6.4 billion of its shares in 2021.
CEO Buffett has viewed stock buybacks as the best way to return capital to Berkshire shareholders and a better use of money than buying publicly traded stocks.
$Berkshire Hathaway-A (BRK.A.US)$ 
$Berkshire Hathaway-B (BRK.B.US)$ 
$Apple (AAPL.US)$ 
$Alphabet-C (GOOG.US)$ 
$Microsoft (MSFT.US)$ 
$Netflix (NFLX.US)$ 
$Tesla (TSLA.US)$ 
$T-Mobile US (TMUS.US)$ 
$Regeneron Pharmaceuticals (REGN.US)$ 
$Oracle (ORCL.US)$ 
$Cerner (CERN.US)$ 
$adidas AG (ADDYY.US)$

When it comes to buyback, many people may think of stock prices raising and investors confidence increasing... But is this true?
Buyback essentially means that the listed company spends money to buy its own stock, which produces two results: one is "blocking" for writing off; the other is "hiding" for later use.
There are many reasons for giant companies to buyback stocks:
1. Major shareholders feel that the company's prospects are very good, but the stock price is too low. Instead of selling it cheaply, it's better to buy it yourself.
This sends a signal to the market that the company's stock price is severely undervalued, thereby increasing investor confidence and stabilizing the price.
2. When the company has an amount of freely flowing funds and feels that the stock price is indeed low, it will also repurchase the stock.
This can reduce the circulation of stocks in the market, increase earnings per share, and help the prices to the moon.
3. At the same time, the stock option plan for employees can also be perfectly solved by repurchasing. After all, the direct issuance of new shares will dilute the original shareholder rights.
According to normal logic, the stock price will rise after buyback. But is this true?
The world of capital is very complicated.
First of all, it depends on the strength of the repurchase. The price depends on the game between buyers and sellers. The more you buy in, the easier for rising. On the contrary, with a daily turnover of more than one billion, but millions of buyback for a stock, which has no effect on the trend of the stock price.
Sometimes, the purpose of buyback is not simple. Major shareholders want to reduce their holdings, but the stock price has fallen sharply. At that time, it’s not worthwhile to reduce their holdings. Therefore, it throws out a buyback plan to stabilize the stock price.
In fact, there are many reasons that affect the company's stock price. Even if the price is undervalued, it’s difficult to repair it by repurchase. For the market, buyback conveys good news and gives investors confidence. But it can only be used as a bonus item rather than trading standards.
$Meta Platforms (FB.US)$  $Apple (AAPL.US)$  $Alphabet-A (GOOGL.US)$  $Microsoft (MSFT.US)$
（Your like and follow are all my motivation to share）

Basically, I am in favour of stock buyback or stock repurchase for the following reasons:
1) An effective utilisation of a company’s excess cash flow.
2) A decrease in the number of shares lying around in the market. With this decrease the shares’ prices will be raised
3) A positive reward for the shareholders who will be allowed to purchase the company’s stocks at a reasonable prices.
Giant companies worldwide are participating in this stock buyback strategy and they fare well. Companies that have successfully embraced the stock buyback strategy are:-
$Apple (AAPL.US)$ 
$Tesla Ecosystem (LIST1180.HK)$ 
$Netflix (NFLX.US)$ 
$Berkshire Hathaway-A (BRK.A.US)$ 
$Berkshire Hathaway-B (BRK.B.US)$ 
$McDonald's (MCD.US)$

Recently, there is this rage of elite companies participating in Stock Buyback globally like $Apple (AAPL.US)$, $NASDAQ (NASDAQ.US)$, $McDonald's (MCD.US)$. Their active participations make one wonders "What is stock buyback and why it is so popular? This refers to a company's requisition of it's own outstanding shares from the shareholders on the open market.
A company's image and more importantly, it earnings will be enhanced by this move. Stocks' buybacks or re- purchases will reduce the number of outstanding shares on the market. As such a company financial statistics will definitely reflect a more positive outlook in the balance sheet. This is attributed by a reduction of a company's excess cashflow as well as a decrease in the numbers of outstanding shares. With this sudden reduction of the number of shares in the market, it will certainly escalate the value of the remaining shares because of the supply and demand principles.
Personally, it is generally benefitting for the investors because:
It is a flexible way of rewarding the shareholders instead of issuing them with dividends which are taxable.
A boost in share prices will increase the investors confidence in the company's shares.
However, stock repurchase is a double edged sword and if not properly handed
it can mislead the investors to lose more. Ultimately I still favour stock buyback. Some of the more reliable companies to consider are:
$Boeing (BA.US)$ , $Apple (AAPL.US)$ , $Dow Jones Industrial Average (.DJI.US)$