stock-repurchase

Vocabulary Word

Definition

'Stock repurchase', also known as a 'buyback', is when a company buys its own outstanding shares to reduce their number on the open market. It's like a company taking back pieces of a pie it once gave out.

Examples in Different Contexts

In corporate finance, a stock repurchase, or buyback, is when a company buys back its own shares from the marketplace, reducing the number of outstanding shares. A financial analyst might say, 'Stock repurchases can increase shareholder value by increasing earnings per share and concentrating ownership.'

Practice Scenarios

Business

Scenario:

I noticed company XYZ has a lot of cash reserve. The market might expect some form of distribution.

Response:

Given their resources, they might consider a stock repurchase to return cash to shareholders.

Investment

Scenario:

It's crucial to monitor signs of a company's confidence in its future potential. What actions would signify that?

Response:

One strong sign would be if they initiate a stock repurchase. It often indicates the company's positive groundwork for growth.