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This and stock buybacks make me question company valuations
by barbarr 11mo ago
This and stock buybacks make me question company valuations
- ctkhn 11mo agoStock buyback isn't a total scam as it seems, but it does mean "we can't figure out any productive use case for this cash in advancing R&D or scaling our business anymore" which is still pretty worrying
- yen223 11mo agoI suppose stock buybacks are similar to dividends in that regard
- petesergeant 11mo agoBy that logic, any profit a company distributes to shareholders is worrying.
- BobbyTables2 11mo agoIt’s more like, “the executives with lots of shares can’t see how to make the company grow, so they’ll just use profits to pump up the share price for their gain”. I deeply feel buybacks shouldn’t be illegal but treated shamefully. Instead of using profits to build up long term savings or fund R&D, they basically choose to do as little as possible. There is no vision.
- ljlolel 11mo agoInvestments into vision can juice the stock price too. So they would do it if they had good realistic inspiring ideas
- aoeusnth1 11mo agoShould companies never pay dividends?
- wmf 11mo agoRealistically, if the execs think they can't do R&D then they can't. If they tried they would just waste the money.
- lelanthran 11mo ago> Instead of using profits to build up long term savings or fund R&D, they basically choose to do as little as possible. Isn't buying stock a form of long term savings? After all, they can always sell that stock when they want to "withdraw". Sure, they may not get the same return as simply stashing it into a bank account, but it's also a statement of confidence in their future: "We are sure that our stock will outperform every other option there is for storing our money, because our long-term plans include extracting more profit from the market."
- redwood 11mo agoStock buyback is effectively just a dividend with a different tax implication: reducing the number of shares in circulation raises the ownership stake of the remaining shares
- danans 11mo ago> Stock buyback is effectively just a dividend with a different tax implication Not just different, it specifically a lower tax rate assuming that the stockholder has held long enough to use the long term capital gains tax rate (which lower than the dividend tax rate).
- danpalmer 11mo ago[in the US]