As I understand it a company does not generally hold its own stock like other investors do [0]. You should think of it more as a sink/source for the stock. So

As I understand it a company does not generally hold its own stock like other investors do [0]. You should think of it more as a sink/source for the stock. So the company can just arbitrarily create as much of its own stock as it wants. Obviously doing this will dilute existing shareholders, so companies won't do this unless there's a good reason to. Likewise, when the company buys back stock, that stock just disappears, so now every other shareholder has a larger fraction of the company. [0]: I think the main exception here is that there might be an employee equity pool. The board will approve a certain number of shares to be created for the pool, and then they'll sit around and gradually be transferred to employees as their stock grants vest.