Stock question: What does 'Share buy backs' mean?

Question

I have shares in a company (Nvida) and just issued a 'Share buy backs'.

I have no idea what this means, is this good or bad?

Should I sell my stocks?

Answer 1

Buy backs - all else equal - are good.  The company issuing the shares repurchases their own stock (buy back).  This takes a number of the publicly traded shares off the market, driving up the price per share of those shares still available on the open market after the buy back.  It is typically a sign of a strong company, and is often employed as a strategy when a company is cash-rich, and does not want to dilute the company's value through an overly aggressive acquisition of another company, or extending the company's offerings during a tough economic cycle.  Repurchasing stock allows them to increase their intrinsic value without mergin, aquiring or expanding, then wait for the shares to go up in value once the economic cycle becomes more advantageous in the future.    

Answer 2

ditto. you generally want to hold on to your shares in this kind of situation. and if you get dividends they might also become higher than they would have been without the buybacks. in any case you may want to keep up with the company's news and its stock price.

EDIT: numquat, good point. sometimes the deal is too good, and it's better to cash out...

Answer 3

The company just feels that the current price of their stock is too low...who should know better?... so they take the oppotunity to buy shares at the low price. It is usually a sign of " confidence" on the part of the " board of directors"...they figure when the price goes UP a little, they can sell those shares and add large amounts of " cash" to their bottom line.

If I were you, I would " hold" for a little while ..( those guys on the board are usually pretty smart about " share value".)

Answer 4

I  totally agree with Farfel below - However, if you can sell at a good price, I would -  

Answer 5

The company buys back stock from the shareholders.  they do this to decrease the amount of shares and keep the stock at a strong price.

so if they buy alot back you actually own a bigger share in the company