why are stock buybacks bad?
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A share of stock represents a piece of the company. Every company has a value. Valuation is too large of a subject to cover here. But, as an example, say my company can be proven to be worth $100,000 and I have 1,000 shares. Then each share should be worth $100.
As others have said, we cannot say *a priori* if a stock buyback is good or bad. It depends on how much the company pays to buy back their business relative to it’s true underlying value. It is **bad** for the current shareholders if management chooses to pay $150 per share when the shares are only worth $100 per share. It is **good** for current shareholders if management manages to buy existing shares for $75 each when they’re actually worth $100.
IRL, valuation is quite complicated so it can be difficult to assess whether or not management is making intelligent purchases of their shares. They may be motivated by other factors that have nothing to do with shareholder value. The may be overly optimistic about their own plans and strategies.
Given the recent declines in equity prices in March 2020, I would be inclined to assume that companies buying back shares today are getting a great bargain.
[EDIT] See a book called _The Intelligent Investor_ for details on how the price of a stock can deviate from the value of the underlying business. The short summary is that investors tend to overreact in terms of either optimism or fear. When investors are optimistic they believe the business is worth a lot and are willing to pay very high prices. When they are fearful (like now) they are pessimistic about future conditions and future earnings they will only be willing to pay much lower prices for the same company.
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