An English newspaper noticed that many U.S. corporations are unable to change the habit of buying their own shares. The USA is experiencing the worst recession in years.
According to speculation, the share buy-outs should fall and all of this is caused by the Coronavirus, as the companies will make less profits. It is worth knowing that many S&P 500 companies that have so far recorded profits for the second quarter have reduced their shares on average by 0.3% in the previous quarter. We are currently living in a time when basically any kind of money is worth its weight in gold, and yet corporations still prefer to buy their own shares rather than invest in distribution networks, production, or share profits with shareholders.
Many studies in the US show that the largest multinational corporations are still buying their own shares or even accelerate their purchases. It is also worth knowing that the scale of this phenomenon is highest in the technology companies sector.
Alphabet, Google’s parent company, spent $6.9 billion on buying its own shares this quarter, which is 92% more than a year ago. This information is taken from the documents published by the company itself.
Microsoft, the second biggest company on the stock exchange, bought 5.8 billion USD worth of their own shares in that period, which is 25% more than a year prior. It is likely that this is why their stock market value has increased so much.
Biogen spent $2.8 billion on repurchases of its own shares during this period, which is 17% more than last year. No shares were purchased in the second quarter of last year, but up to $97 million was spent on their own shares in the last quarter. Celanese increased its planned buy-outs for this year by $500 million, reaching a total of $1.5 billion.
Apple has once again been noted as the largest buyer of its own shares. It repurchased stocks for 16 billion dollars in the second quarter, which is a 6% decrease compared to the previous year. This can be seen as the most significant repurchase in the last few years among S&P 500 companies.
What are repurchase sectors like?
As it turns out, the technology companies form the S&P 500 have announced a buy-out for nearly $700 million. The fact that companies spend money on what they like is not the biggest problem. The point is that they downsize, while at the same time buying their own shares for billions of dollars.