Glossary · Stocks and markets
Share buyback
A share buyback is when a company buys its own shares back from investors, so each remaining share owns a bigger slice of the company.
Also called: stock buyback, share repurchase, buyback, stock repurchase
2025, new shares minus shares retired: they retired more shares than they issued.
$903B since fiscal 2013, from its annual reports.
In plain words
Ten friends own a pizza shop together, one-tenth each. One of them wants out, and the shop uses its own cash to buy her slice. Now nine friends own the same shop, one-ninth each. Nobody put in more money, yet everyone who stayed owns more. That is a share buyback.
Companies do it with spare cash, as an alternative to paying dividends: instead of sending every owner a check, they buy shares on the market and cancel them. Owners who sell get cash; owners who stay own a bigger part of the company.
It is now the main way US companies hand cash back. Counting all new shares minus all shares retired, US nonfinancial companies retired more shares than they issued in 2025: a net $348B.
Example
Same profit, fewer shares
- A company earns $100 million a year and has 100 million shares: EPS of $1.00. The shares trade at $20, a P/E of 20.
- It spends $200 million of spare cash buying back 10 million shares at $20, and cancels them.
- Next year profit is the same, minus the $8 million of interest the cash would have earned: $92 million ÷ 90 million shares = $1.02 a share.
- Had it paid the $200 million out as a dividend instead, each share would have received $2.00 in cash, and EPS would be $0.92.
A buyback and a dividend hand back the same cash; the buyback does it by shrinking the number of slices.
One level deeper
Buybacks are not free money. The company’s cash goes down by exactly what it pays, so the value of each remaining share rises only if the shares were bought for less than they were worth; overpaying hurts the owners who stay. Many companies also issue new shares to their employees, and part of their buybacks only makes up for that.
They have critics and defenders. Critics say managers use them to lift EPS and their own pay instead of investing; defenders say that handing back cash a company cannot use well is exactly what owners want. Since 2023, US companies pay an excise tax on their net buybacks: 1% as of 2026.
Until 1982, buying back shares on the open market carried a legal risk in the US; that year the SEC’s Rule 10b-18 created a safe harbor, and buybacks grew from there. Since 2000, US nonfinancial companies have retired a net $7.46T of their own shares, counting shares retired in cash takeovers.
New shares minus shares retired, US companies since 1952
Each bar is one year of net share issues by US nonfinancial corporations: new shares sold, minus shares bought back or retired in cash takeovers. Until the early 1980s, companies issued a little more stock than they retired; since the mid-1980s they have mostly retired far more than they issued. 45 of the 74 years were below zero.
The numbers behind the chart
| Date | Net new shares |
|---|---|
| 1952 | $2.32B |
| 1960 | $1.36B |
| 1970 | $5.71B |
| 1980 | $10.4B |
| 1990 | −$63.2B |
| 2000 | −$35.9B |
| 2010 | −$179B |
| 2020 | −$73.8B |
| 2021 | −$54.5B |
| 2022 | −$553B |
| 2023 | −$603B |
| 2024 | −$397B |
| 2025 | −$348B |
Why it matters
Buybacks are now one of the biggest uses of corporate cash in the US, larger than dividends in most recent years.
They raise earnings per share by shrinking the number of shares, which matters when you compare EPS growth over time.
They are part of why dividend yields look low today: much of the cash handed back to owners now comes this way.
A common mistake
Myth: A buyback always makes shareholders richer.
In fact: It hands back cash that the owners already owned. If the company pays more than the shares are worth, the owners who stay lose; and buybacks paid for with borrowed money add risk.
Questions people ask
Why do companies buy back their own stock?
To return spare cash to their owners, to make up for shares issued to employees, or because managers think the shares are cheap. Unlike a dividend, a buyback is flexible: it can be cut without the bad headlines a dividend cut brings.
Are buybacks better than dividends?
Neither is better in itself. Buybacks let each owner choose whether to sell, and the tax can come later; dividends pay every owner in cash. What matters is the price paid for the shares and what else the cash could have done.
Which companies buy back the most stock?
The largest US companies, by far. Apple alone spent $86.4B on buybacks in fiscal 2026. Our buybacks page ranks every S&P 500 company by the dollars spent and by how much it shrank its share count.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- Apple Inc.: SEC EDGAR XBRL company facts and submissions (financials); Wikipedia List of S&P 500 companies (sector, sub-industry, headquarters, dates).
- US corporate equities: net purchases and net issues by sector (Z.1): Board of Governors of the Federal Reserve System, Financial Accounts of the United States (Z.1), table F51.1 Corporate equities.
- This page explains a term. It is not investment advice.