How a stock buyback works | Marketplace Whiteboard

Companies often buy their shares back from the market. Here's Paddy Hirsch with why and how they do it. #MarketplaceAPM #Whiteboard #StockBuybacks

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[sebastianr.]

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

[smile_bro]

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

[SRGLIST]

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

[sandor]

This showed up on my feed nine years later...Still true. Most senior corporate executives have performance bonuses that are tied to the stock price. If the stock price goes up by X amount, they get a huge bonus. What they do (in a low interest rate environment such as we are still in nine years later) is issue debt (bonds) to gain cash, plus any free cash flow the company has, which they use to buy back shares, which temporarily boosts stock prices, so they get their bonus. These 'bonuses' are life changing amounts of money. They don't care about the financial health of the company, they cash out and move to the Cayman Islands. Eventually the market analyses the balance sheet, and the company tanks.

[cdragon]

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

[bananikas]

Very, very clear and short, keep it like this

[daleeltoft]

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?

[derperderp]

And people are sitting in jail for shoplifting

[teksight]

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

[randomfun]

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?

[pppinto]

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 ?

[LauraMarySkin]

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

[thedanishbaker]

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

[Saidoromo]

Amazing explanatory power, Why not make selling stock options

[Marcusmarcus]

Thanks, you made it very simple to understand

[TheBallers]

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?

[lenr]

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

[gegaoli]

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

[mayacho]

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.

[mnm]

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