Public companies often buy back large blocks of their stock typically when share prices are low. During an economic downturn, stock buybacks usually boom. But it’s not always a big plus for individual investors. Here’s a look at some of the pros and cons of stock buybacks:
Pros of stock buybacks for investors
- Boost in share prices: Stock buybacks can offer a short-term bonus for investors. The buyback means there are fewer shares trading on the public markets. This tends to strengthen the share price, so your shares may be worth more, at least in the short term.