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Are stock buybacks really purely a tax dodge? At a high level, if a company which has taken investment in the past in return for giving up some control of the
by pfannkuchen 2y ago
Are stock buybacks really purely a tax dodge?
At a high level, if a company which has taken investment in the past in return for giving up some control of the company, if they have spare cash later it seems reasonable to buy back some of that control. If available control of the company is then more scarce but the demand hasn’t changed, it’s fair that the share price goes up as a result.
People on the internet seem to treat it as a loophole that is being exploited, but I don’t really see that. Should companies never be allowed to roll back share issuance?
- wmf 2y agoA company cannot control itself and shares that are bought back are canceled so it doesn't really change the ownership. The effects of dividends and buybacks are the same but they are taxed differently.
- pfannkuchen 2y agoIt doesn’t really change the ownership? It undilutes the remaining shares. That’s why they are worth more. If undilution doesn’t really change the ownership, then logically dilution doesn’t really change the ownership either. That is straightforwardly false, therefore your statement is false. I understand the Reddit tier surface level analysis and I am questioning that, while you are just parroting it again back at me.