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by imheresamir 1724 days ago
Can you answer the question "who gets money literally put in their pockets as a result of a stock buyback?"

Hint: the answer is... no one. Investors who held see the value of their holdings increase, again, different from "cash in your pocket"
1 comments
qeternity 1723 days ago
> Can you answer the question "who gets money literally put in their pockets as a result of a stock buyback?"

The investors who sold the shares to the company. Markets aren’t some magical entity that conjure shares out of thin air.

If a company buys back 10 shares, they buy those 10 shares back from an investor who wants to sell 10 shares. That investor now has cash literally in their pocket.

How do you think this stuff works? Where do you think the money goes when companies spend on buybacks?

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imheresamir 1723 days ago
The investors who sold shares to the company did so at the then-current publicly traded share price. I bet they wish they didn't since the stock value increased after the sale. These investors who sold did not benefit from the sale any more than they would have selling on the open market in a non-buyback situation. Hope that makes it clear!
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qeternity 1720 days ago
This is very naive, in incorrect. The stock market goes up on average…investors know this. When they sell it’s usually because they need cash, or they believe there is a better use for their capital. Most people who sell stocks do so knowing that it will continue to go up.

This also has nothing to do with returning cash to investors. They were going to sell the stock anyway. Who cares if it keeps going up? It has nothing to do with the mechanics of a buyback.

> These investors who sold did not benefit from the sale any more than they would have selling on the open market in a non-buyback situation.

What in the ever loving Christ? Why does this matter? You guys just keep moving the goal posts. This simply doesn’t matter and I’m not sure why you guys get hung up on it. Shareholders love buybacks. Why does HN think they have figured something out that millions of other people have missed. It gets so tiring going in circles.

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