Alphabet announced a stock buyback when the company is sitting near all-time highs. Is this ever value-accretive
Alphabet Inc has been carrying forward major tasks in the industry and has not even stopped for a day to carry out what it was always meant to do, being the parent company of major subsidiaries like Google and other related companies. The giant has only recently made the much talked about release of the first quarter to be reported under the new name of the company, which created much of a stir right at that time in the market. Following the earnings, the company also announced that it will be initiating a new program under which it will be starting an authorized selling plan worth up to $5 billion where the sells will be bought back by the company on different platforms.
The repurchase plan for the Alphabet shares will be done only for the stock of the Class C ratings, and this buy back of the shares will start from the next quarter, which will be the first quarter of the new financial year. Analysts who have been keeping a close eye on the activities of the stock giant are of the opinion that this step is one plan that the giant should have taken over a long time back. This clearly shows that the buying back of shares will be taken very positively by the analysts once it starts off properly.
Back in 2014, the tech giant was seen to experience some massive difficulties on the different indexes in the market which are considered when a stock value of a company is to be determined. The indexes which lowered their ratings on Alphabet, which was back then Google business, were none other than S&P 500 along with Nasdaq Composite which also downgraded the giant based on the lack of a repurchase power of the shares. Analysts believe that this downgrade was for the investors to know that the growth of the company might come to a standstill at some point in time, clearly giving out some bearish sentiments to them to think about.
The software giant has been reporting a sustainable growth on the index for some time where its cash flow has also turned out to be quite over to healthier side, which does have a positive effect on the shareholders and investors but with the repurchase of shares, analysts believe that tech giant is going to do wonders in the industry, as it has clearly made its investors quite satisfied. This new plan has been announced by the CFO of the company, namely Ruth Porat.