I own some stock in Apple. Yesterday they announced they will be doing a stock buyback. Will I be compelled to sell the stock back to them? Will I receive some kind of offer from Apple? Will nothing happen?
I’ve searched for this and can only find articles about why companies do stock buybacks, not from the perspective of the shareholder
In: Economics
You won’t be forced to sell. The shares you own will now own more than they did before without you spending any more money.
If apple had 100 shares and you owed 10, you would own 10% of apple.
If apple bought back 20 shares, you would still own 10 shares but total shares would only be 80. So you would own 10/80 = 12.5% instead of 10%
This matters because it means that you get 12.5% of all future earnings instead of only 10%
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