How a stock buyback works | Marketplace Whiteboard

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  • Опубліковано 29 жов 2024

КОМЕНТАРІ • 89

  • @sebastianr.7089
    @sebastianr.7089 4 роки тому +8

    We need more videos like this, Paddy Hirsch freaking rocks!

  • @mayacho4910
    @mayacho4910 Рік тому +185

    Inflation depreciates idle money. I'm in a privileged position to be able to save almost 65% of our net household income, as I placed it on safer investments. The key for us was not spending beyond our means. If you invest and have other sources of income outside of dividends then you will be able to live off dividends. Got north of $520K in my portfolio as I bought a lot of dividend stocks before, I'm buying more now, and I will buy more when it drops further.

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      @theresagarcia1218 Рік тому +2

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      @raymondbarnes5264 Рік тому

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      @mariahhayes5089 Рік тому

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      @danielkey1463 Рік тому

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    • @contenteater
      @contenteater Рік тому

      @@theresagarcia1218People need to lose for there to gain.
      Eat the Sheep 🐑

  • @smile_bro6762
    @smile_bro6762 6 років тому +9

    Buybacks seem to be becoming a trend.
    Thanks for the breakdown.

  • @SRGLIST
    @SRGLIST Рік тому +2

    Wow so far I watch 4 videos and this explain all . Thank you 👍🏼

  • @bananikas9807
    @bananikas9807 2 роки тому

    Very, very clear and short, keep it like this

  • @Phosphoenol_pyruvate_CK
    @Phosphoenol_pyruvate_CK 8 місяців тому +1

    Quick and Concise

  • @teksight9714
    @teksight9714 6 років тому +15

    You forgot to mention buy-backs are also done to game the P/E ratio.

    • @pelumiobasa3104
      @pelumiobasa3104 6 років тому

      Tek Sight how would a company do that

    • @matthewhou3011
      @matthewhou3011 5 років тому +5

      pelumi obasa by buying back shares, the company’s amount of issued shares decreases while the earnings stay unaffected.
      This increase the amount of earnings there is per share hence increasing the company’s P/E ratio.

    • @JennyOwnzable
      @JennyOwnzable 3 роки тому

      @Mark Brown did you ever learn what P&E means? I am learning too.

    • @carltonbanks5470
      @carltonbanks5470 3 роки тому

      Not just P/E. Any valuation metric really.

    • @mikafizz1022
      @mikafizz1022 Рік тому +1

      What is the P/E ratio?

  • @daleeltoft3379
    @daleeltoft3379 9 років тому +12

    OK so now we know how the buybacks work. Next can you explain why a company would do it? You kind of said it was to keep the price up, but why would they care? They already got their money at the IPO. Unless they know something and are planning some insider trading. So what the point of a buyback?

    • @marketplaceAPM
      @marketplaceAPM  9 років тому +26

      Dale Eltoft They didn't necessarily get all their money. The execs and board members are also shareholders, so the higher the share price goes, the greater their wealth on paper. They can then borrow against that wealth, as can the company, using the shares as collateral.

    • @rmb_49ers
      @rmb_49ers 5 років тому +2

      some execs get bonuses based on stock price

    • @ProfAzimov
      @ProfAzimov Рік тому

      @@marketplaceAPM How about stock compensation

  • @Saidoromo2024
    @Saidoromo2024 4 роки тому +1

    Amazing explanatory power, Why not make selling stock options

  • @cdragon88
    @cdragon88 3 роки тому +3

    My man explained this in less than two minutes while others take over ten. Noice.

    • @mikafizz1022
      @mikafizz1022 Рік тому +1

      True! Thanks for the positivity dude!

  • @derperderp9036
    @derperderp9036 4 роки тому +13

    And people are sitting in jail for shoplifting

    • @contenteater
      @contenteater Рік тому

      Blue Collar Crime doesn’t pay.
      White Collar is where it’s at 💅

  • @khaleelbbqowboy1370
    @khaleelbbqowboy1370 4 роки тому

    thanks, very informative, i didnt know what buybacks were before

  • @holbrook-ul9cf
    @holbrook-ul9cf 3 роки тому

    Excellent explanation

  • @AbsurdistPanda
    @AbsurdistPanda 11 місяців тому

    I love these so much

  • @Marcusmarcus318
    @Marcusmarcus318 4 роки тому

    Thanks, you made it very simple to understand

  • @davidalen9279
    @davidalen9279 4 роки тому

    Superb. Thank you

  • @randomfun7871
    @randomfun7871 6 років тому +1

    I have 1 big question, lets say company announces buy back and they have 10 million outstanding share. They are thinking of buying back 100k shares. Who will get chance to sell that premium price out of 10 millions? What happens after buy back at premium and you still have those shares?

  • @pppinto97
    @pppinto97 6 років тому +3

    So what happens to the bought shares and who is the owner ? Are the shares bought up and cancelled out, which may , maybe decrease the market cap since number of shares multiplied by price of one share is market cap. The downside is, what is there's no demand for the shares irrespective of buyback or not. And what is promoter buyback ?

    • @Keshini.D
      @Keshini.D Рік тому

      Some really good points

    • @pppinto97
      @pppinto97 Рік тому

      @@Keshini.D Thanks for the compliment. Now answer it

    • @doyinsage
      @doyinsage Рік тому

      They have a few options. They can decide to reissue the shares in the open market at a later date, retire the shares, or offer employment as part of a compensation/bonus program. I find the action to be shady. Some companies like he mentioned borrow money to execute this procedure.

  • @lenr7137
    @lenr7137 5 років тому +9

    Just a way to increase shareholders’ profits at the expense of reinvesting in R&D, workers’ wages, etc. Greed personified.

  • @TheBallers102
    @TheBallers102 3 роки тому +1

    Say a business plans to pay dividends In perpetuity wouldn’t it be obvious for the company to buy back shares not as a way to prop up the stock price but as a way to save money in the future?

  • @SacerKtracho
    @SacerKtracho 4 роки тому

    Thank you.. now I understand.

  • @mnm121314
    @mnm121314 9 років тому +20

    oh, so this is what apple is doing... now i know :)

    • @arpankarmakar16
      @arpankarmakar16 5 місяців тому

      They recently bought back $110b of their shares this month in 2024.

  • @vacayislife7828
    @vacayislife7828 6 років тому

    Great break down enjoy the video. 👍🏿

  • @nurafiqahsaridaut2548
    @nurafiqahsaridaut2548 6 років тому

    short and precise :) thanks!

    • @drimarket4877
      @drimarket4877 3 роки тому

      He is misleading you.. its short , all right. . But extremely far from precise. I admit , he said a few thing that were true , but most of them were wrong if not a lie .And more important is what he didn't say , either because he didn't know or left it out by design. UA-cam in the worst place to come and think you learn about how financial instruments work.. 1 word true , 99 false or lie or misleading. So , in the end , i would go as far as to say that this is disinformation .

  • @plasticusclinic
    @plasticusclinic 6 років тому +1

    Great video mate, can debt recapitalization refer to buying back stocks??

  • @gegaoli
    @gegaoli Місяць тому

    What is the execution date for these common stock repurchases…trade date?

  • @laurasalmieri6810
    @laurasalmieri6810 6 років тому

    Well done!

  • @naveenvasubhaskar5180
    @naveenvasubhaskar5180 7 років тому

    Thanks a lot!

  • @roe2123
    @roe2123 4 роки тому

    How does a company benefit from higher stock price? After they create their initial shares and sell them to the exchanges, isn’t every transaction after that among those of us who trade?? Not sure I get how this helps them become a more profitable business.

    • @ProfAzimov
      @ProfAzimov Рік тому

      Better access to debt and equity financing

  • @mutondukalota6098
    @mutondukalota6098 3 роки тому +1

    Wow, can't believe this is still allowed. In my country this is restricted.

  • @shubhamsahu4722
    @shubhamsahu4722 5 років тому

    So the company will pay me my money(partly) to buy my share???
    Can anyone please explain?? Coz I already own that money which the company will pay me??

    • @jazzypoo7960
      @jazzypoo7960 4 роки тому +1

      A CEO makes most of his/her money by selling stocks.

  • @cryptictv3865
    @cryptictv3865 5 років тому

    the end was unexpected!

  • @srijaljoshi3421
    @srijaljoshi3421 3 роки тому

    Can a company buyback it's shares in the dark pool?

  • @dlongstreet85
    @dlongstreet85 9 місяців тому

    This is what amc stock needs to do

  • @daleeltoft3379
    @daleeltoft3379 9 років тому +1

    Poolplayler999, Your reasons make sense but like a 2 year old I need to ask why. #1 needs no further explanation, but #2 & #3 lead me to wonder why does the company care? Investors obviously care about EPS and thus that will affect demand but unless the company is selling stock (and here we know it is buying) what does it matter? If a stock is undervalued why would the company want to signal? Seems to me that the better move would be to play the market by buying the stock to resell when the price goes up. Why are companies so concerned about their stock price and what motives do they have for manipulating/affecting it?

    • @anjalisrinivas8964
      @anjalisrinivas8964 9 років тому +2

      if the company feels their stock is undervalued they repurchase shares sometimes with excess cash generated by the company or by financing the repurchase through debt to gain leverage, to send a positive signal to the investors. the repurchase can increase EPS for a shareholder. the shareholders instead of getting cash as dividends that is taxed get greater income where essentially the tax burden is minimised..now coming to the point why a company would undertake buyback.. they do so to create a price floor. it's one effective way to take advantage of decreased market value to repurchase shares by timing it. this is generally done when management feels the shares are undervalued.

    • @neneklampir6664
      @neneklampir6664 7 років тому

      Simple. So they (the board directors) able to do right issue in the future.

  • @forever_golfer1981
    @forever_golfer1981 4 роки тому

    A stock buyback is considered Treasury Stock to the layperson. FYI

  • @fr0xk
    @fr0xk Рік тому

    Stocks that belong to companies not paying dividends despite being profitable or currently in a loss but promising future profits and dividends can be seen as resembling Ponzi schemes. The application of the discounted cash flow model, though justified by academic jargon, can be considered a means of legitimizing this Ponzi-like structure. Hypothetical assumptions, until realized, hold no tangible value, and relying solely on such assumptions does not substantiate any claims.

  • @staceya.775
    @staceya.775 4 роки тому

    Your accent 😍

  • @frodedahl3494
    @frodedahl3494 Рік тому

    share buybacks can be a very good way to return capital to long-term investors. A lot of misconception "out there" regarding share buybacks. It's not all about raising share price - it increases earnings per share and dividends per share for all future.

  • @shekarsharma8217
    @shekarsharma8217 4 роки тому

    I wonder how many Marker pens you must have broken up till now

  • @justinmorse1289
    @justinmorse1289 8 років тому +2

    Wow is this guy ignorant. If a dividend stock is significantly undervalued, buying back shares can increase the dividend yield, even without a net increase in earnings. Also, in some markets, there is not always a smart investment out there for the company to make; pooring money into growth, when growth is too expensive is not a good idea. Sometimes the best investment for a company is the companies stock.

    • @andydavis3075
      @andydavis3075 7 років тому +2

      Justin Morse but isn't that market manipulation and is a risk to investors?

    • @Earthandweather
      @Earthandweather 6 років тому

      Justin Morse He is wise. You are ignorant. Ponder that my myopic friend.

    • @plasticusclinic
      @plasticusclinic 6 років тому +1

      You can disagree with someone without calling them ignorant. It's called "different opinions". It is healthy for people in finance to have different opinions.

    • @tomberry66
      @tomberry66 5 років тому +3

      @@plasticusclinic , the problem is that this person is ignoring the fact of ownership. It is rather like he slept through accounting 101.
      If a company has 100 shares of stock, then each share represents 1% of the company.
      If it buys back 50 shares of the stock, then the people who sell the shares get cash, and each of the remaining 50 shares now represents 2% of the company.
      The analogy to handbags is not accurate.

    • @tomberry66
      @tomberry66 5 років тому +1

      @@andydavis3075 , It could be done in a manipulative way, or it could be done unwisely, but it is not inherently manipulative.
      The maker of the video ignores the fact that each share of stock represents ownership in the company. If a company buys back the stock, then each remaining share is more valuable because it represents a larger portion of ownership.

  • @drimarket4877
    @drimarket4877 3 роки тому

    This explanation is a little wrong. They 're not just hoping that after buying some of the stock back , the rest will create more demand. No. There's no HOPE involved here . But what is involved here is inside trading. Letting certain ppl know when yjou're doing it and how much you'll dump on the market. Then those ppl go to their ppl , tell them to buy , because they know the mother company will BUY BACK those shares as a higher price , and voila.. Bob is ur uncle , and you don't have to hope shit. You only think you know , but in reality you have no idea how murky are these waters...

  • @Josh-kn5wn
    @Josh-kn5wn 6 років тому

    this made no sense........

  • @pewpewsalote8802
    @pewpewsalote8802 Місяць тому

    this should be illegal

  • @TheDoombugg
    @TheDoombugg 5 років тому

    So basically they buy their own product so stocks can grow? Nice