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>I'm curious if anyone in the pro-Fedex crowd can provide evidence to the contrary I'm not sure I'm "pro-Fedex", but: "stock buybacks, which boost a company’s
by aguyfromnb 7y ago
>I'm curious if anyone in the pro-Fedex crowd can provide evidence to the contrary
I'm not sure I'm "pro-Fedex", but:
"stock buybacks, which boost a company’s stock price and market value"
Stock buybacks do not increase the company's market value. Cash goes out, stock comes in. Balance sheet is the same.
My second point would be: is 2 years long enough to determine the effects of the tax cut? Companies the size of Fedex can't make massive changes to budgets overnight.
- hef19898 7y agoMarket value of public companies is not determined by the balance sheet but by the stock price multiplied by the number of share. Buybacks reduce the number of shares and by increasing demand increase the price per share. In the first step, the market value is a constant, taking out the number of shares thus increases directly the share price. Which are than further increased by increased demand and increasing the market value as now the number of shares is constant. So yes, buy backs directly increase the market value. Why else would companies do them? They also have the nice side effect of increasing the value of execs' stock options, again a nice motivation for a CEO to do a buyback.
- s1artibartfast 7y agoDemand for stock is not determined by the number of outstanding shares.
- hef19898 7y agoNope. But buying back large amount of shares is driving prices by reducing the number of shares and increasing demand.
- s1artibartfast 7y agoBuybacks are routinely priced above the list prise to ensure sales. Once the buyback occurs, the only change in corporate value should reflect the improved financial fundamentals of the company.