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Yes, the market cap of the company is lowered by the amount it spends on the buy back, however the value per share stays the same. A year later the profit from
by exoque 7y ago
Yes, the market cap of the company is lowered by the amount it spends on the buy back, however the value per share stays the same. A year later the profit from the new year is included in the market cap which is divided by a lowet number of shares. This means the value of a single share is now higher while the market cap is the same as in the beginning.
Or am i missing something?
- fallingfrog 7y agoYes you are, the company has given up a bunch of cash which could have been used to hire staff, buy capital and so on, so again if the stock price is correct they have decided to forego some profits due to the buyback, and it should cancel out.
- exoque 7y agoFair point.