Share Repurchase

A corporation can buy its own shares back from the market in a share repurchase. When management believes that a company's shares are undervalued, it may decide to purchase them back. The business either purchases shares directly off the market or gives its stockholders the choice to sell their shares to the business at a predetermined price. This procedure, also referred to as a share repurchase, lowers the number of outstanding shares. Investors frequently believe that buybacks will enhance the share price since they reduce the supply of shares. This presupposes that the measure won't reduce interest in the shares. In addition, a company repurchasing its own shares indicates a conviction in the stability and continued growth of its own business.