Intel Brags of $152B in Stock Buybacks. Why Does It Need an $8B Subsidy?

Re:Intel Brags of $152B in Stock Buybacks. Why Does It Need ... by Retric on Thursday March 28, 2024 @07:47AM (#39850003)

Because it’s independent of other price signaling mechanisms. The company doesn’t buy the stock because it thinks that stock is a good investment, it does so because of how it influences future prices.

Ignoring inflation if a company issues the same inflation adjusted dividend forever say 1% at current prices. In theory the stock should stay roughly the same over the next hundred or thousand years. However, with a buyback the stock would increase constantly forever with endless stock splits.

The second option is great for long term owners in terms of taxes, but it’s also manipulation of the stock price.

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Re:Intel Brags of $152B in Stock Buybacks. Why Does It Need ... by davrosthedalek on Thursday March 28, 2024 @07:53AM (#39850062)

No, it buys it /because it has money to spare/. Having the money to spare makes it a good investment.

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Re:Intel Brags of $152B in Stock Buybacks. Why Does It Need ... by Retric on Thursday March 28, 2024 @07:57AM (#39850109)

Companies can have net profits and be terrible investments.

The exact same company can be a great investment at 10$, and a terrible investment at 10,000$. You can’t separate stock price from if something is a good investment or not.

The example I gave was low risk 1% dividend, that’s not a stock I would want to own. Net result the company, which has inside information, should expect the price to correct ie fall at some point and thus be a poor investment until that point. That doesn’t prevent them from buying it because the goal isn’t a positive ROI.

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