News: Microsoft approves $40 billion share repurchase program
News: Microsoft approves $40 billion share repurchase program. Can someone please just explain in plain English what this means for a shareholder ?
Number of shares on the market will decrease & the value of each share will increase
Over time, this share buyback program will reduce the number of outstanding shares of Microsoft stock. This reduces the supply of Microsoft shares. Assuming demand and financial results remain constant this translates to increased share price. Moreso if financial performance continues to grow as earnings per share increases (due to fewer shares outstanding). Microsoft is also increasing their per share dividend, which makes shares more valuable, which increases per share price (all else remaining equal).
When the shares are inexpensive, buybacks create value for shareholders. When shares are overvalued, it destroys shareholder value but is a sneaky way to boost earnings per share without having to run the business any better.
Why can’t they put money in their future growth? They don’t believe they can increase the stock value by growing (kinda like amazon was doing?)
They don't have productive ways to deploy it. They're not stupid.
I am not saying they are stupid... and what do you mean no productive ways to deploy cash?
This has been there for the last 5 years. Why is this news now? The program is authorized by the board till 2022, extendible to 2025
It's not ideal, paying dividends is better in my opinion. Buybacks are a scam
The stock price will be the same or go up