Stock question - Repurchasing Program?

BobS

Newb stock question here.

What effect should I expect if I own a small price per share (<$1) stock in a company that just announced a stock repurchasing program? I understand dividends, but not this.

Is this good, great, bad, run for z hills, unknown?

Thanks in advance.

Bob

jmski52

Generally, a stock repurchasing program will support the stock price, but this is a "penny stock" and anything goes. If you know the management, do you trust these folks? A stock repurchase simply indicates that the management believes the stock is a better investment than other alternatives that might be out there. Fewer shares outstanding means that any earnings or dividends will be spread between fewer shares.

They might be trying to manipulate the percieved stock performance before making a public offering. Or, they could be trying to consolidate ownership for various reasons. No way to know, unless you're on the inside.

fishcooker

Depends. Are they "repurchasing" stock given to the executives.

MsMorrisine

nothing compels them to actually repurchase shares.

they can announce and do nothing.

I don't know if it has been studied, but stock purchase programs can be really poorly timed.

however, they are still viewed as upbeat news. It is supposed to indicate the company is undervalued.

one criticism that might apply well to a penny stock:
can't they find something better to do with the company's money than buy stock? innovate? development? expansion? pay down debt?


it would be interesting if this turned out to be some legal form of pump-and-dump.


PM me the ticker. I want to watch this one.

BobS

Pm sent. Thanks for the replies.

Bob