To The Moon

E-commerce giant $Alibaba(BABA)$ Hikes Buybacks to $ 25 Billion as Crackdown Signals Ease.

Topic: The largest repurchase of Chinese stocks: Alibaba 25 billion US dollars!

So far in March alone, Seattle-based $Amazon.com(AMZN)$ announced a 20-for-one stock split and a repurchase program valued at up to $10 billion, $Colgate-Palmolive(CL)$ announced a $5 billion stock buyback program, and $Best Buy(BBY)$ announced a $3 billion one. Pepsi set a $10 billion repurchase program.Benefit of Buyback to Stock, to company, and to the market.

A share repurchase reduces the number of shares outstanding, it increases earnings per share (EPS). It *appears* as though earnings are rising more than they actually are.

A higher EPS elevates the market value of the remaining shares. After repurchase, the shares are canceled or held as treasury shares, so they are no longer held publicly and are not outstanding.

Not only can buybacks provide benefits on the supply side, but they can also increase demand for the stock. That can increase the stock price or at least provide some price support in periods of weak demand.

According to Goldman Sachs's Data, Buyback programs in 2022 are on track to hit a record $1 trillion, twice as much as five years prior.So far this year, S&P 500 companies have announced repurchase programs worth $238 billion.What made such a tremendous buyback extravaganza possible?

Look no further than the Fed and other central banks of the world keeping the cost of capital so artificially low that it was practically free money for corporations to borrow and then buyback shares, decreasing floats.

An inordinate amount of buybacks have occurred during this bull market. Well over $10 Trillion in just 7 years. The impact of these buybacks artificially increases EPS and compresses multiples. Both of which have been meaningfully distorted.

Technology see the biggest buyback, $AAPL bought about 40% of its float! Then Financial Sector, Consumer Discretionary sector.

According to Pavilion Global Markets: 21% of S&P 500 Index returns since 2011 are driven by P/E expansion growth, but it would be quite a bit higher if there weren't such a historic degree of buybacks transpiring over the same period.

So do we see the other side now of less buybacks and falling market？

The current number of active buyback programs is about twice the normal average, according to Goldman's report.