After Uber recorded its first annual profit, with an operating profit of $1.1 billion, driven by an ever-growing user base, and the company’s increasing foothold in the grocery and food delivery sectors, the company has now announced its first share repurchase programme. The tech giant lintends to buy back $7 billion worth of shares. CFO Prashant Mahendra Rajah has called the move a “vote of confidence in the company’s strong financial momentum.”
Airbnb also announced a $6 billion repurchase programme, following which the share price skyrocketed.
What is a ‘Share Repurchase Programme?’
As the name suggests, it is when a company decides to purchase its shares from the market. This can be done when analysts in the company feel the share price is undervalued. What this also results in is ‘Earnings-per-share’ or EPS increasing, as by reducing the number of shares in the market, the dividend paid out on each share is also larger.
This, in most cases, results in the overall share price increasing as well, especially when the market is looking ‘bullish,’ which is what Uber and Airbnb are looking to capitalise on.
The only downside to this is its unforeseen consequences. For a company to announce a buyback, it needs to be in a healthy financial position, however, if the company faces severe financial obligations, or if investors still do not see value in the company, then it heads into a difficult situation.
Other developments in the tech, within the stock market
Meta, previously Facebook, announced its first dividend, which will be $0.5 for Q1 2024. The announcement took the finance world by storm, as its share price skyrocketed to a record high. Mark Zuckerburg is set to become one of the highest dividend earners, as he is expected to earn around $700 million.
Amazon also hit a 52-week high, as Q4 earnings were higher than expected by analysts, and net income saw an increase.
Nvidia stock price skyrocketed last year, as it was up 220%; easily the best performer of last year has carried the momentum over to this year being +46% YTD. As the tech sector goes more into AI and its subgroups, Nvidia has been one of the frontrunners in capitalising as they are one of the best chipmakers on the market. The stock has also been in the spotlight for other reasons, as Nancy Pelosi, a representative from California, allegedly used insider information to place calls on the stock, earning her millions.
Apple faced setbacks, causing prices to stagnate. Apple saw prices plummet after weaker sales in China; although it's not all gloomy as their new headset, the Vision Pro, gives investors and executives at the company a ray of hope.
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