EBay Announces Aggressive Buyback

[HardOCP News]

BusinessWeek says eBay, confident after a 24% jump in 4Q profits, has announced an aggressive stock buyback plan that will take place over the next two years.

The San Jose-based e-commerce powerhouse announced Wednesday it would repurchase up to $2 billion of common stock within the next two years. Stock buybacks are considered a quick way to pump up a flagging stock price -- if companies have plenty of cash and are confident about future earnings growth.

 

[Ockie]

I wonder if they are aiming at a buyback to go private? That would be interesting.

 

[provoko]

Buyback is a tactic compians use to raise it's own stock price. But what ends up happening is that a rush of investors buy the stock in hopes the company will buy theirs at a higher price, that rush of buying raises the stock by its self without the company doing anything.

For example Comp X's stock is at $5 and says it'll buy back at $20. Investors buy stock as long as it's price is below $20. In the end the stock goes up to $18-$19 and the company buys the rest to put it at $20.

Businessweek.com said it it's self in that ariticle: "The San Jose-based e-commerce powerhouse announced Wednesday it would repurchase up to $2 billion of common stock within the next two years. Stock buybacks are considered a quick way to pump up a flagging stock price -- if companies have plenty of cash and are confident about future earnings growth."