It might seem naive, but I'm wondering if you can clarify. That theoretical floor you spoke of when a company buys back its shares with cash is because of what? I can imagine that buying back shares means fewer outstanding. That would mean lower supply and thus higher price and less price vulnerability to institutional and retail investors selling.
You're right - fewer shares means higher price because you're dividing the value of the company across fewer shares (same sized pie cut into fewer slices). Opposite is also true for companies that constantly issue shares, diluting ownership stakes for existing shareholders.
Also, companies may set target prices to buy shares providing support at that level. If I find it I'll share, but there's research suggesting a significant portion of market returns over the past several years is due to buyback programs.
It might seem naive, but I'm wondering if you can clarify. That theoretical floor you spoke of when a company buys back its shares with cash is because of what? I can imagine that buying back shares means fewer outstanding. That would mean lower supply and thus higher price and less price vulnerability to institutional and retail investors selling.
You're right - fewer shares means higher price because you're dividing the value of the company across fewer shares (same sized pie cut into fewer slices). Opposite is also true for companies that constantly issue shares, diluting ownership stakes for existing shareholders.
Also, companies may set target prices to buy shares providing support at that level. If I find it I'll share, but there's research suggesting a significant portion of market returns over the past several years is due to buyback programs.