Share buybacks

When a company uses its cash to buy back its own shares. Fewer shares remain, so each one owns a bigger slice of the company and its profits.

Simple example

A company has 10 shares and $100 of profit: $10 per share. It buys back 2 shares, and the same $100 of profit is now $100 ÷ 8 = $12.50 per share.

Before: 10 shares$100 ÷ 10 shares = $10.00 per shareAfter buying back 2 shares$100 ÷ 8 shares = $12.50 per share
Made-up numbers, for illustration only.