Facebook plans to buyback an additional $9 billion of shares.
On Friday, the social network giant mentioned in a regulatory filing that it is adding $9 billion to its previously authorized share repurchase program of up to $15 billion. A stock buyback lowers the number of outstanding shares of a company, thereby potentially boosting the earnings-per-share (particularly in the near-term) – something that could attract investors or more demand for the company’s stock. Investors could also view buybacks as indicative of the company’s adequate cash availability, which could be another potential tailwind for its stock.
The timing of Facebook’s beefing up its stock buybacks does not seem surprising, given its recent challenges. Ever since the company mentioned in July that it expects slowing of growth and thinning of profit margins over the coming years, Facebook stock price has declined almost -40%. In March, its potential role in mishandling user data in relation to the Cambridge Analytica scandal was revealed. Later this year, hackers got access to 50 million accounts on Facebook