3 ms·
Number of shares doesn't matter, enterprise value does and it doesn't change. Your implying that there would be a further equity issuance which doesn't routinel
by phyalow 11y ago
Number of shares doesn't matter, enterprise value does and it doesn't change. Your implying that there would be a further equity issuance which doesn't routinely happen on buybacks.
- eru 11y agoExactly. If number of shares would matter, share splits would matter.
- JDDunn9 11y agoMarket cap = shares outstanding * share price. Reducing shares increases the price (while keeping market cap the same). Share splits increases the shares outstanding and decreases the price. So... yes, shares outstanding does matter.
- phyalow 11y agoNow you are confusing outstanding shares with market float. Shares repurchased become treasury stock and are now apart of equity.
- JDDunn9 11y agoWhether the company destroys the shares or retains them as treasury stock is irrelevant. Investors don't care if their share price went up by 10%, or if they effectively have 1.10 shares.