[NovemberWhiskey]

A stock buyback is not like the company is buying its own stock and holding it in a brokerage account.

Think about it like ... the opposite of an IPO. Instead of dividing up the firm into n shares and selling them to investors for cash; it's buying back n/m shares and effectively canceling them.

After the buy back, there are fewer shares of the company which are proportionately more valuable assuming the market capitalization has remained the same.

[Sohcahtoa82]

I looked up if a company can do the opposite - basically poof additional shares into existence and sell them - and found out they basically can and it's called stock dilution.

How is that legal? It doesn't make sense to me that if a share is worth x% of a company that said company can just decide "Nah, you actually now only own half of that" and sell more shares.

Fake edit: I googled "how is stock dilution legal" and found this [0] which explained it well and now it makes sense to me. The diluted stock might be a smaller % ownership, but since the company gained value because of money coming in, the dollar value of the shares stays the same.

[0] https://money.stackexchange.com/questions/58391/why-is-stock...