Glossary · from the DESK dictionary
Share Buyback
A company repurchasing its own shares on the open market.
In plain words
Instead of paying a dividend, the company buys back its own shares, reducing the number outstanding.
In more detail
A buyback acquires a company's own shares and thereby reduces the number outstanding. What matters for the investor is whether the repurchase happens below intrinsic value: only then does it create value for the remaining shareholders. Buying above value transfers wealth from those who stay to those who sell — exactly the reverse of the intention.
Example
A company buys back 8 percent of its shares at 62 euros against an intrinsic value of 44. The remaining shareholders lose 1.4 euros per share on the arithmetic.
What it means for traders
Alongside dividends, the second major tool companies use to return capital to shareholders.
Common pitfalls
Can be questioned when companies buy back shares at high prices or prioritize buybacks over worthwhile investment.
Related terms
Accelerated Share Repurchase (ASR) · Adjusted EBITDA · Dividend · Earnings Per Share (EPS) · Stock Buyback Program · Treasury Stock
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.