Why do companies buy back stock shares?First, let me explain why they sell shares in the first place.
Companies usually need to find ways to get cash to begin their business or take it to the next level. (Although, they sometimes simply need to get enough money to pay their bills.)
A company can get money one of a few different ways:
1. Loans (usually from banks)
2. Bonds (these are really loans...but from investors)
3. Stock--selling portions (equity) of their company in exchange for money
So when a company SELLS shares of stock, they get money, but they also give up a portion of their company.
Why does a company buy back shares of stock?