How a stock buyback works | Marketplace Whiteboard
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- เผยแพร่เมื่อ 21 ส.ค. 2024
- Companies often buy their shares back from the market. Here's Paddy Hirsch with why and how they do it. #MarketplaceAPM #Whiteboard #StockBuybacks
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@@theresagarcia1218People need to lose for there to gain.
Eat the Sheep 🐑
We need more videos like this, Paddy Hirsch freaking rocks!
Buybacks seem to be becoming a trend.
Thanks for the breakdown.
My man explained this in less than two minutes while others take over ten. Noice.
True! Thanks for the positivity dude!
Quick and Concise
You forgot to mention buy-backs are also done to game the P/E ratio.
Tek Sight how would a company do that
pelumi obasa by buying back shares, the company’s amount of issued shares decreases while the earnings stay unaffected.
This increase the amount of earnings there is per share hence increasing the company’s P/E ratio.
@Mark Brown did you ever learn what P&E means? I am learning too.
Not just P/E. Any valuation metric really.
What is the P/E ratio?
Wow so far I watch 4 videos and this explain all . Thank you 👍🏼
Amazing. Short and to the point. Very clear explanation
And people are sitting in jail for shoplifting
Blue Collar Crime doesn’t pay.
White Collar is where it’s at 💅
OK so now we know how the buybacks work. Next can you explain why a company would do it? You kind of said it was to keep the price up, but why would they care? They already got their money at the IPO. Unless they know something and are planning some insider trading. So what the point of a buyback?
Dale Eltoft They didn't necessarily get all their money. The execs and board members are also shareholders, so the higher the share price goes, the greater their wealth on paper. They can then borrow against that wealth, as can the company, using the shares as collateral.
some execs get bonuses based on stock price
@@marketplaceAPM How about stock compensation
Very, very clear and short, keep it like this
oh, so this is what apple is doing... now i know :)
They recently bought back $110b of their shares this month in 2024.
So what happens to the bought shares and who is the owner ? Are the shares bought up and cancelled out, which may , maybe decrease the market cap since number of shares multiplied by price of one share is market cap. The downside is, what is there's no demand for the shares irrespective of buyback or not. And what is promoter buyback ?
Some really good points
@@Keshini.D Thanks for the compliment. Now answer it
They have a few options. They can decide to reissue the shares in the open market at a later date, retire the shares, or offer employment as part of a compensation/bonus program. I find the action to be shady. Some companies like he mentioned borrow money to execute this procedure.
Just a way to increase shareholders’ profits at the expense of reinvesting in R&D, workers’ wages, etc. Greed personified.
🤑
I have 1 big question, lets say company announces buy back and they have 10 million outstanding share. They are thinking of buying back 100k shares. Who will get chance to sell that premium price out of 10 millions? What happens after buy back at premium and you still have those shares?
I love these so much
Amazing explanatory power, Why not make selling stock options
thanks, very informative, i didnt know what buybacks were before
Excellent explanation
Thanks, you made it very simple to understand
Wow, can't believe this is still allowed. In my country this is restricted.
Say a business plans to pay dividends In perpetuity wouldn’t it be obvious for the company to buy back shares not as a way to prop up the stock price but as a way to save money in the future?
Thank you.. now I understand.
Great video mate, can debt recapitalization refer to buying back stocks??
Superb. Thank you
Great break down enjoy the video. 👍🏿
short and precise :) thanks!
He is misleading you.. its short , all right. . But extremely far from precise. I admit , he said a few thing that were true , but most of them were wrong if not a lie .And more important is what he didn't say , either because he didn't know or left it out by design. TH-cam in the worst place to come and think you learn about how financial instruments work.. 1 word true , 99 false or lie or misleading. So , in the end , i would go as far as to say that this is disinformation .
Well done!
Thanks a lot!
This is what amc stock needs to do
the end was unexpected!
Poolplayler999, Your reasons make sense but like a 2 year old I need to ask why. #1 needs no further explanation, but #2 & #3 lead me to wonder why does the company care? Investors obviously care about EPS and thus that will affect demand but unless the company is selling stock (and here we know it is buying) what does it matter? If a stock is undervalued why would the company want to signal? Seems to me that the better move would be to play the market by buying the stock to resell when the price goes up. Why are companies so concerned about their stock price and what motives do they have for manipulating/affecting it?
if the company feels their stock is undervalued they repurchase shares sometimes with excess cash generated by the company or by financing the repurchase through debt to gain leverage, to send a positive signal to the investors. the repurchase can increase EPS for a shareholder. the shareholders instead of getting cash as dividends that is taxed get greater income where essentially the tax burden is minimised..now coming to the point why a company would undertake buyback.. they do so to create a price floor. it's one effective way to take advantage of decreased market value to repurchase shares by timing it. this is generally done when management feels the shares are undervalued.
Simple. So they (the board directors) able to do right issue in the future.
How does a company benefit from higher stock price? After they create their initial shares and sell them to the exchanges, isn’t every transaction after that among those of us who trade?? Not sure I get how this helps them become a more profitable business.
Better access to debt and equity financing
So the company will pay me my money(partly) to buy my share???
Can anyone please explain?? Coz I already own that money which the company will pay me??
A CEO makes most of his/her money by selling stocks.
Can a company buyback it's shares in the dark pool?
Stocks that belong to companies not paying dividends despite being profitable or currently in a loss but promising future profits and dividends can be seen as resembling Ponzi schemes. The application of the discounted cash flow model, though justified by academic jargon, can be considered a means of legitimizing this Ponzi-like structure. Hypothetical assumptions, until realized, hold no tangible value, and relying solely on such assumptions does not substantiate any claims.
Your accent 😍
I wonder how many Marker pens you must have broken up till now
share buybacks can be a very good way to return capital to long-term investors. A lot of misconception "out there" regarding share buybacks. It's not all about raising share price - it increases earnings per share and dividends per share for all future.
This explanation is a little wrong. They 're not just hoping that after buying some of the stock back , the rest will create more demand. No. There's no HOPE involved here . But what is involved here is inside trading. Letting certain ppl know when yjou're doing it and how much you'll dump on the market. Then those ppl go to their ppl , tell them to buy , because they know the mother company will BUY BACK those shares as a higher price , and voila.. Bob is ur uncle , and you don't have to hope shit. You only think you know , but in reality you have no idea how murky are these waters...
Wow is this guy ignorant. If a dividend stock is significantly undervalued, buying back shares can increase the dividend yield, even without a net increase in earnings. Also, in some markets, there is not always a smart investment out there for the company to make; pooring money into growth, when growth is too expensive is not a good idea. Sometimes the best investment for a company is the companies stock.
Justin Morse but isn't that market manipulation and is a risk to investors?
Justin Morse He is wise. You are ignorant. Ponder that my myopic friend.
You can disagree with someone without calling them ignorant. It's called "different opinions". It is healthy for people in finance to have different opinions.
@@plasticusclinic , the problem is that this person is ignoring the fact of ownership. It is rather like he slept through accounting 101.
If a company has 100 shares of stock, then each share represents 1% of the company.
If it buys back 50 shares of the stock, then the people who sell the shares get cash, and each of the remaining 50 shares now represents 2% of the company.
The analogy to handbags is not accurate.
@@andydavis3075 , It could be done in a manipulative way, or it could be done unwisely, but it is not inherently manipulative.
The maker of the video ignores the fact that each share of stock represents ownership in the company. If a company buys back the stock, then each remaining share is more valuable because it represents a larger portion of ownership.
this made no sense........
So basically they buy their own product so stocks can grow? Nice
A stock buyback is considered Treasury Stock to the layperson. FYI
Companies can also do stock buybacks tho.