That money isn’t gone. It’s an investment. They can liquidate it for future expenses. It’s still theirs.
Buying back shares means that the money does go out the door in exchange for reduced shares outstanding, an increase in EPS (not because of actual better earnings but because of fewer shares), an increased share price, sometimes only temporarily, because of the better optics of the better EPS, and possibly a lower market cap if the share price doesn't go up to counter the reduced shares outstanding.
It's essentially an accounting trick to make the stock price look better.
Yeah, and a lot of execs will turn around right after and sell their stock options based on that temp bump in share price. It's a REALLY sneaky way to give themselves an enormous off the books bonus.
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u/cb_1979 5d ago edited 5d ago
Buying back shares means that the money does go out the door in exchange for reduced shares outstanding, an increase in EPS (not because of actual better earnings but because of fewer shares), an increased share price, sometimes only temporarily, because of the better optics of the better EPS, and possibly a lower market cap if the share price doesn't go up to counter the reduced shares outstanding.
It's essentially an accounting trick to make the stock price look better.