Guide
What Is a Share Buyback?
A share buyback (or repurchase) is when a company buys back its own shares from existing shareholders, reducing the number of shares outstanding. It's one of the main ways, alongside dividends, that a company returns cash to shareholders.
How a buyback works
The company uses its cash reserves to repurchase shares, either through a tender offer (inviting shareholders to sell at a set price, usually above market) or from the open market. The bought-back shares are extinguished, so the total share count falls.
Why companies buy back shares
- Boost per-share metrics — fewer shares means higher EPS for the same profit.
- Signal confidence — management buying its own stock can signal it believes the shares are undervalued.
- Return surplus cash — an alternative to a dividend, sometimes more tax-efficient.
Buyback vs dividend
A dividend pays cash to all shareholders; a buyback returns cash only to those who sell, while increasing the stake of those who hold. Both are corporate actions you can track in the data.