How buyback affects share price?

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A buyback generally has a positive impact on the share price and, the share price tends to rise once the buyback gets announced.

The share price tends to rise due to the shortage in the supply of shares that gets created due to the shares repurchased by the company. Another reason for the increase in the price rise is the increased investor confidence in the company financials as only a company with healthy financial can announce a buyback.

With a reduction in the number of outstanding shares and earnings remaining the same, the EPS also improves significantly, leading to a price rise.


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