Investing term

What is Share buyback?

A company buying its own shares back on the secondary market.

A share buyback is when a company uses its cash to repurchase its own shares on the market, shrinking the share count. With fewer shares outstanding, each remaining one represents a bigger slice of the company and its earnings, which can lift earnings per share. Buybacks reward shareholders like dividends do — but only create real value when the shares are bought at a sensible price.

For example

A company buys back 5% of its shares, so even with flat total profit, earnings per share rise 5% — each remaining share owns a little more.

Share buyback is taught hands-on in Stage 8 — Corporate Actions: What Lands in Your Account.

See the lesson →

Related terms

AcquisitionOne company buys another. The bought company's shares are converted to cash, acquirer stock, or a mix at the closing price.Carve-outA parent company sells part of a subsidiary in an IPO, keeping a stake.Corporate actionAny event initiated by a company that changes its securities or distributes value to holders.Cost basisWhat you originally paid for a holding, used to calculate gains and losses when you eventually sell.
← Back to the full glossary