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Stock Repurchase In October 2016, the board of directors of Alphabet authorized the company to repurchase up to $7,019,340,976.83 of its Class C capital stoc
by d4l3k 10y ago
Stock Repurchase
In October 2016, the board of directors of Alphabet authorized the company to repurchase up to $7,019,340,976.83 of its Class C capital stock. The repurchase is expected to be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.
Is it typical for Google to have stock repurchases? I haven't heard of them doing that before.
- ariwilson 10y agoHappened last year but I think that was the first time: http://www.nytimes.com/2015/10/23/technology/google-q3-earnings-alphabet.html?_r=0 http://www.nytimes.com/2015/10/23/technology/google-q3-earni... Does anyone know what the number $7,019,340,976.83 refers to? The previous buyback amount referred to the square root of 26, the number of letters in the alphabet.
- ultimoo 10y agoCan someone shed light on why companies do a stock repurchase?
- xyzzyz 10y agoIt is a mean to return money to shareholders. The reason it is used over paying dividends is tax optimization. If you pay out the dividend, the shareholders need to pay income tax. If you do stock buyback, the shareholders need to pay capital gains tax, which is deferred until sale, and can even be offset by losses incurred on other capital holdings.
- kbutler 10y agoThere is also a different level of expectation: investors expect dividends to continue and to increase year-by-year. Stock buybacks produce much weaker investor expectations. Oh, and stock-option holders (employees/management) benefit from share buybacks, but not from dividends.
- hencq 10y agoBasically a way to reward shareholders. They're more or less equivalent to dividend, but considered more tax efficient, because capital gains tax is lower than tax on dividends.
- sokoloff 10y agoLong term capital gains and qualified dividends (which is most of them) are generally taxed at identical rates. Capital gains have a choice of timing advantage over dividends. (You can choose to take them now, or next year if you don't want the income exposure this year.) The holding period required for long-term treatment is more than enough to qualify for the qualified dividend treatment.
- Retric 10y agoThis is misleading. A dividend is a taxable event, with stock buybacks people who hold the stock can defer taxes indefinitely. In theory, a hypothetical company with a 1$ dividend every year would see it's stock price rise and fall by 1$ through this cycle. A buyback would see a continuous increase in price.