Buying back shares it sold at a lower price, right? The lifecycle of a share starts with the transfer of money to a company in exchange for a share. It ends with a buy back, ideally at a higher price.
But still, at the beginning it is a transfer into the company’s coffers.
The last time meta sold stock on the market was a primary stock offering in December 2013, roughly a year and a half after its initial public offering (IPO).
I find it crazy that so many people misunderstand this basic fact about how the market works.
100% correct, but I'll add that companies do use shares in other ways which also matter.
For example shares can be used for buying labor. Either as options or as grants, bonuses etc. It ultimately winds up in the public shares pool, but the first recipient receives it in place if company cash.
The second major use is in acquisitions. Buying other businesses using stock instead of cash is a useful tool often wielded. Again, not released onto the open market, but winds up there eventually.
Plus you can use them as loan collateral, balance-sheet improves and so on. So their price matters and their value to the business extends far beyond the IPO.
Meta was a $26 Bn net purchaser (opposite of issuer)
Buying back shares it sold at a lower price, right? The lifecycle of a share starts with the transfer of money to a company in exchange for a share. It ends with a buy back, ideally at a higher price.
But still, at the beginning it is a transfer into the company’s coffers.
The life cycle of a share starts at IPO. The S&P 500 does not add companies to its index until at least 12 months after IPO.
Also, Meta issued 180 MM new shares at $38/share at IPO. That’s ~$7 Bn. Which is less than 1/4th of what they repurchased just last year.
Between share repurchases and dividends, S&P 500 companies are putting money into the markets, not pulling it out.
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Companies buy back shares as a different way than dividends to enrich their shareholders.
Exactly: enrich shareholders at the expense of their own coffers.
> enrich shareholders at the expense of their own coffers.
This makes no sense. The coffers belong to the shareholders.
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In big tech’s case it’s mostly to offset massive stock compensation of executives and insiders
yes, if it sells them on the market.
The last time meta sold stock on the market was a primary stock offering in December 2013, roughly a year and a half after its initial public offering (IPO).
I find it crazy that so many people misunderstand this basic fact about how the market works.
100% correct, but I'll add that companies do use shares in other ways which also matter.
For example shares can be used for buying labor. Either as options or as grants, bonuses etc. It ultimately winds up in the public shares pool, but the first recipient receives it in place if company cash.
The second major use is in acquisitions. Buying other businesses using stock instead of cash is a useful tool often wielded. Again, not released onto the open market, but winds up there eventually.
Plus you can use them as loan collateral, balance-sheet improves and so on. So their price matters and their value to the business extends far beyond the IPO.