Definition

Noun: A stock buyback is a financial operation in which a corporation repurchases its own shares from the marketplace. This reduces the number of shares outstanding, which can increase earnings per share and often leads to a rise in the stock price. It is also a strategy used to return capital to shareholders and can be employed to defend against potential takeover attempts.

Usage

A stock buyback is a corporate action. It is typically announced by a company's board of directors and executed over a period of time. The repurchased shares are either retired (cancelled) or held as treasury stock.

Examples

• The board authorized a $5 billion stock buyback program over the next two years.
• After the stock buyback, the company's earnings per share increased significantly.
• Investors often view a stock buyback as a sign that management believes the stock is undervalued.

Advanced Usage

• "to announce/authorize/execute a buyback": These verbs are commonly used with the term to describe the stages of the process.
  • The tech giant announced a massive share buyback to boost investor confidence.
• "buyback program": Refers to the authorized plan for repurchasing shares, which often has a specified monetary value and timeframe.
  • The new buyback program will allow the company to repurchase up to 10 million shares.

Variants and Related Words

• Share repurchase: A direct synonym for stock buyback.
• Buyback (noun): A common shortened form of "stock buyback."
• Treasury stock (noun): Shares that have been repurchased by the issuing company and are held in its treasury.

Synonyms

• Share repurchase
• Share buyback

Related Concepts (Not Phrasal Verbs)

• Dividend: An alternative method for a company to return capital to shareholders, involving a cash payment per share.
• Takeover defense: A strategic reason for a buyback, as reducing the number of publicly traded shares can make a hostile takeover more difficult and expensive.

Noun

1. a corporation's purchase of its own outstanding stock; increases earnings/share so stock price rises (which can discourage a takeover attempt)