A stock buyback, also known as a share buyback, is a corporate action in which a company repurchases its own outstanding shares from the market. Companies may choose to buy back their shares for a variety of reasons, such as to reduce the number of outstanding shares, to increase the value of remaining shares, or to return excess cash to shareholders.
Stock buybacks can be conducted through open market purchases, in which the company buys back shares on the open market through a broker, or through a tender offer, in which the company makes a formal offer to purchase a specific number of shares at a fixed price.
When a company buys back its shares, it reduces the number of outstanding shares, which can increase the value of remaining shares by reducing the supply. However, it is important to note that stock buybacks do not guarantee a profit or protect against loss. It is also a good idea to consult with a licensed financial advisor or to seek the advice of a financial professional before making any investment decisions.
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