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> while the company spends $8B profit in buybacks with minimal impact on share price Well, there must have been an impact of $8B, so it depends what the counte
by astrange 2y ago
> while the company spends $8B profit in buybacks with minimal impact on share price
Well, there must have been an impact of $8B, so it depends what the counterfactual was. It could've been going down at the time.
> Large funds
Generally speaking large funds are passive index funds, so that doesn't mean someone actually owns a lot of them - they're just in average people's retirement accounts. But it gets reported as if BlackRock (iShares) or Vanguard own the company, which leads to conspiracy theories.
- ricardobeat 2y ago> there must have been an impact of $8B Buybacks don’t linearly increase share price, the stock is simply exchanging hands. If the company already has a 100B market cap, that amount is not making any huge waves, especially spread around a full year. Replace “large funds” with “large shareholders”, the point is that employees receiving relatively tiny stock compensation do not benefit much.
- astrange 2y ago> Buybacks don’t linearly increase share price, the stock is simply exchanging hands Sure they do. Each repurchased share no longer exists, unless they're issuing new ones at the same time. The total value of the company stays the same, or something else might happen to change the price afterwards, but it should indeed be a linear increase.
- ricardobeat 2y agoThe shares don’t cease to exist, they are simply not in the market anymore. And the cash used to buy them already belonged to the shareholders in the first place, no value is added other than price pressure from the reduced float. Market dynamics aside, it is a net zero transaction.