Not every stock buyback is good - what is the META with you?
There are several stock buybacks recently. Does this mean that we should buy the stocks of these companies that performed stock buybacks?
Here is a news extract from CNBC on 19th August 2022:
With low-interest rates boosting profits and values, S&P 500 companies bought back a record $881.7 billion of their own stock in 2021, up from $519.8 billion in 2020, according to S&P Global data.
A significant percentage comes from a handful of so-called “buyback monsters,” with five companies — Apple , Google parent Alphabet, Facebook parent Meta, Microsoftand Bank of America — making up one-quarter of the dollar value of stock buybacks over the past year.
This is a post from Twitter user "21stCentValue" dated 7 Oct 2022.
META - a poorly-executed buyback program. $48B spent in the past year at avg. price of $303. Stock is currently $133. And buybacks decelerated as the stock fell.
Based on the current price, the (current) value of the purchased stocks stands at $21B compared to $48B spent for buybacks. Yes, not all buybacks are good for the company. For Meta, they have incurred a loss of $27B ie (56% loss).
META buyback since July 2021
My investing muse
Not every stock buyback is good for the company even though it helps to improve the EPS. Let us not jump at every buyback news in hope that the company will do better. Let us do our due diligence - the company should be qualified before we invest.
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