Genuine question: the company earning is still negative or neutral, where do they get money buy their stock back? How does it help their business? In most case, a company does it when they have a solid cashflow position. Snap is certainly not
To manipulate the price
It’s simple. This is how executives cash out from their business. If your business makes 100M then how does it benefit you? Because you can’t spend that money for personal use. You have shares but limited. You can’t sell a lot because you need to control business and you can’t pay yourself a salary of 4-5M because they will be all gone in taxes. So you take payment in stock grants and when they are vested. You issue stock buy backs. This artificially inflated stock prices up until you sell your stock at high price. Also, capital gain tax is only 20% and no state taxes. Win -win. No one will oppose this because all executives want to do this. Now this all makes sense when company is doing well but what if when companies are not doing ok or going downhill. In that executives need to do this much faster as they don’t care about control and only cash that goes into personal use. The best companies to invest are ones: 1. Pays a consistent dividend. 2. Majority stake is by institutional investors who don’t control the board 3. Are part of major indexes such as QQQ or SPY
Their founders don't get paid in either $ or RSUs but pumping up the stock inflates the value of their existing equity.
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That only mean one thing, the stock is going downhill pretty fast