I’ve seen some posts about companies wanting government financial relief, but people are concerned about how much money was spent on buy backs. What are these?
In: Economics
They bought their own stock back on the open market. It’s a method of enriching the company and putting control in the hands of fewer stockholders.
Companies issue shares of ownership of the stuff the company owns, called stock. They sell these ownership shares to people. These sales give the firm money to do stuff. The value of those shares also reflects the value of the company. High share prices can make it easier for firms to borrow money when they need it.
Firms with a lot of cash on hand are under intense pressure to find a use for it (as money just sitting around isn’t doing anything). One of the big things they can do with that cash is to buy those shares of ownership back from people that hold them. This can raise the price of the remaining shares and, overall, make investment in the company look more attractive.
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