Why Facebook is buying back its shares

by bold-lichterman

Facebook announced on Friday that it was increasing its share buyback program by $ 9 billion, according to an official document. This is in addition to the $ 15 billion buyback program launched in 2017.

There is no cut-off date for the buyback program. The announcement gave action a boost after the market closed on electronic trading. The stock was up 1.38% at 10 p.m. GMT and the company was worth just under $ 395 billion on the stock market on Friday. On July 25, the title was still worth $ 217.50. He finished at 137.42 on Friday.

Increase earnings per share

Share buyback programs generally allow the price of a security to rise. With the announcement of a slowdown in growth and a reduction in its margins in July as well as the various scandals in which the social network has become entangled, his has lost more than 37% compared to its historic high. So the fact that the company is increasing its share buyback program says a lot about its strategy.

Facebook, which can count on the significant profits generated in recent years, approved a buyback program in 2016 and launched it the following year. For some time now, its number of diluted shares per quarter has been falling, which automatically increases its earnings per share (EPS). This increase of $ 9 billion in its share buyback program therefore shows that the social network intends to continue this strategy while its margins should be reduced while the company accelerates its spending to renew its model.