What Is a Stock Buyback? Definition & Effects

Andara Puchino

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Stock buybacks are usually viewed as a positive signal by the market. 

What Is a Stock Buyback?

When a publicly traded company repurchases outstanding shares of its own stock on the open market (or directly from existing shareholders), this is known as a stock buyback. When a stock buyback occurs, two things happen immediately—the number of shares outstanding decreases, and the proportion of the company each share represents increases.


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