Finance
What is Stock buybacks?
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.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains stock buybacks.
Key things to understand
- 1A company repurchases its own shares.
- 2Fewer shares can lift the value of those that remain.
- 3It's a way to return cash to shareholders.
- 4It's an alternative or complement to paying dividends.
Frequently asked questions
- 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.