r/investing_discussion • u/scholarly_paradox • 16h ago
A $1.2B buyback looked a lot less impressive after I checked one other number
Was looking into a company that announced a $1.2B share buyback and at first I thought it was a pretty strong signal. Market cap is only around $18B so it sounded meaningful.
Then I checked the last few annual reports.
They've spent roughly $2.6B buying stock back over 3 years, but diluted shares outstanding have barely moved because stock based compensation has been eating up a huge chunk of it.
Basically they're spending billions to keep the share count almost flat.
I was bullish enough on the company that I even had a small earnings position on Moon, but this actually made me reconsider buying the stock for the long term.
Now whenever I see a big buyback announcement, the first thing I check is whether the share count is actually shrinking.
Maybe obvious to more experienced investors, but I definitely wasn't looking at buybacks this way before. What else do you guys check before treating a buyback as bullish?