Post by
Walter333 on Dec 30, 2021 10:09am
Key reasons buybacks are controversial
The key reasons buybacks are controversial: The impact on earnings per share can give an artificial lift to the stock and mask financial problems that would be revealed by a closer look at the companys ratios. Companies will use buybacks as a way to allow executives to take advantage of stock option programs while not diluting EPS. Buybacks can create a short-term bump in the stock price that some say allows insiders to profit while suckering other investors. This price increase may look good at first, but the positive effect is usually ephemeral, with equilibrium regaining when the market realizes that the company has done nothing to increase its actual value. Those who buy in after the bump can then lose money
Comment by
Renofund on Dec 30, 2021 10:17am
uneducated or inexperienced retail investors may fall for it as DD is limited at best. This stock is a classic holding for them. Anyone doing any sort of DD would look at history of sharebuy backs and R/S and wonder when the next one is coming to keep stock alive. EPS will be misleading with this name given share count flucuations which is why other mtetrics show real story