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US companies race through 1 trillion dollar buyback wave in record time

US companies plan share buybacks on a historic scalewhich is a sign of the American economy's confidence in the economy. Nvidia Corp is the latest company to join the long list of buyback plans.

The announced buybacks exceeded the 1 trillion US dollars reaching this level in a very short time, according to data from Birinyi Associates. The previous record was set in October last year.

In recent months, corporate giants - particularly in the areas of finance and technology - have given the green light for extensive share buyback programs.

Source: https://www.moneyweb.co.za/news/markets/us-firms-racing-through-1trn-buyback-spree-in-record-time/

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8 Comentarios

Sina@lawinvest

I see this in two ways:... on the one hand it's good - they are doing something for the shareholders and it may be seen as a sign that the companies are expecting further growth and are therefore now buying back "cheaply".

On the other hand, buybacks are always a means of stabilizing the share price and boosting confidence when times are not so rosy

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The W.@thewolfofallstreetz

@lawinvest Another reason: they see limited opportunities for sensible reinvestment and prefer to return the money to shareholders, e.g. Apple.

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Epi@Epi

Woe betide the companies if they need capital at some point and all they can do is sell their repurchased shares again. Then the slide goes in the other direction at double speed!

It is easy to observe a self-reinforcing system under construction. It works great for a while, but the further it goes, the more unstable it becomes. And at some point it crashes - necessarily, as it always does.

(Soros, Theory of Reflexivity)

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The W.@thewolfofallstreetz

@Epi Quite possibly. However, I think this is unlikely for the heavyweights. Alphabet, for example, generated the announced $ 70 bn buyback volume in 2 quarters (measured by operating cash flow). In addition, they are sitting on 95 bn $ cash with only 24 bn $ long-term debt.

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Epi@Epi

@thewolfofallstreetz The reversal scenario seems unlikely in the short term. After all, that is part of the upward phase.
In the long term, some companies that once belonged to financial giants and mega cash cows and were insolvent or insignificant a few decades later, e.g. General Motors, have already been hit.

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Floriano@FlorianoPerlini

Apple should invest in clever & innovative products

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The W.@thewolfofallstreetz

@FlorianoPerlini Too much money and too few ideas... Hence buybacks.

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risk_taker_2194@risk_taker_2194

Always this panic

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