Thursday, August 31, 2006

Amazon.com buying back $500 mil of their own stock

Amazon.com announced that they are buying back $500 million of their own stock over the next two years. When companies have buybacks, it generally has a bullish effect on the stock for two reasons. First, the substantial buying of shares of a company tends to drive up the share price. Second, the more shares that the company buys in, the less shares outstanding there would be, making the shares more valuable (fewer shares owning the same company, so each share that each stock represents is a bigger piece of the pie).

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