foxex: What Is a 'Buyback'?

Thursday, August 13, 2020

What Is a 'Buyback'?

Term of the Day | Words to Know

A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.

Related to "Buyback"

Stock Buybacks: A Breakdown

Learn about stock buybacks and how they affect financial ratios and stock value.

4 Reasons Investors Like Buybacks

Buybacks benefit investors by increasing share prices, effectively returning money to shareholders in a tax-efficient manner.

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What Happens When a Company Buys Back Shares?

When a company buys back shares of its stock, the shares can be reissued, retired, or given to employees.

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Related Definitions

Controlling Interest

Controlling interest is when a shareholder, or a group acting in kind, holds a majority of a company's voting stock.

Dilution

Dilution occurs when a company issues new stock which results in a decrease of an existing stockholder's ownership percentage of that company.

Tender Offer

A tender offer is an offer to purchase some or all of shareholders' shares in a corporation.

Buyback Ratio

A buyback ratio is the amount of cash paid by a company for buying back its shares over the past year, divided by its market cap at the beginning of the period.