After $220 million in share buybacks, Nine has announced that it will finish its share buyback scheme because of the changing market conditions.
👉 Background: Nine Entertainment is the Aussie media company with a whole range of media TV and publications, like Channel Nine, 3AW, 2GB, The Age and the AFR to name a few. Two years ago, Nine Entertainment announced it would start a share buyback plan where it would buy back up to 10% of its stock.
👉 What happened: But now, after $220 million in share buybacks, Nine has announced that it will finish its share buyback scheme because of the changing market conditions.
👉 What else: Nine has been struggling with a weaker ad market as well as the fact it lost a pretty juicy media bargaining deal with Meta. And now, it’s laying off over 200 staff. So the buyback may not be the best use of its cash right now.
💡Share buybacks can be both a great opportunity but also can create a significant risk.
💡When a company buys back shares, it lowers the number of shares available in the market. This often boosts a company’s earnings per share and its share price. But on the other hand, share buybacks can signal to the market that a company has run out of other investment opportunities.
💡But even worse is when shares are purchased at inflated prices. In Nine’s case, its share price has dropped 37% over the last year. So rather than continuing to invest in a declining share price, Nine has decided to put a pause on the buyback.
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