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What is a stock buyback?

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Quick answer

A stock buyback is when a company buys back its own shares from the market. This reduces the number of shares outstanding, which can raise the value of remaining shares and is a way of returning cash to shareholders, like dividends.

Key things to understand

  1. A company repurchases its own shares.
  2. Fewer shares can lift the value of those that remain.
  3. It's a way to return cash to shareholders.
  4. It's an alternative or complement to paying dividends.

People also ask

What is a stock buyback?
When a company buys its own shares back from the market, reducing the number outstanding.
Why do companies buy back stock?
To return cash to shareholders and potentially raise the value of remaining shares.
Are buybacks good or bad?
It depends — they can reward shareholders, but critics say the cash could fund growth or wages instead.