Xiaomi is one of the largest telephony companies in the world, the third for accuracy both in terms of expansion in the markets and in terms of shipments (and collections). However, this does not mean that everything is beautiful and positive. Rather. We remember that three years ago the company went public on the Hong Kong stock exchange even if the result was not what was hoped for at that moment. The title stood on 54 billion dollars (Hong Kong dollars) and stopped there. After three years the brand has decided to rbuy 10 billion of these in shares. But why? What does it mean? Let's try to clarify.
Xiaomi has repurchased a large amount of its shares even if the price continues to drop: we are talking about 10 billion in all
We are not economists, we say it right away. However, we went online to find out what a company buyback means. With that poco that we managed to understand, let's try to shed some light on this movement it might seem (to the most unsuspecting) a good thing for some, while for others it is not. According to what was communicated by Reuters, Xiaomi's shares have lost more than a third of their value since the company was blacklisted in the United States in mid-January (more info , promising e , promising) for its alleged links with the Chinese armed forces. This has forced American investors to "abandon ship".
These in fact have withdrawn their "participation" leading to one decrease in share price. It is at this time that the company decided to buy back its shares. But what does this mean? We report what we read from Financial Education:
The repurchase of treasury shares occurs when a company uses its liquidity to buy its stock on the market, with the result that, after the transaction, the value of the company will be spread over a smaller quantity of securities and therefore the value of the single share company will grow.
The definition perfectly explains what a "share buyback" means. Put simply the company went to stop a certain number of shares by repurchasing them, so that the cost and value of each of these will increase in the future, as the overall value of the company will be redistributed across fewer securities. This is undoubtedly a positive step (or not?) that, fortunately, to us end users it changes poco. However, we believe it is important to know how the company is moving. After this move the company stated:
Board believes a share buyback under current conditions will demonstrate the company's confidence in its business prospects and create shareholder value
Tell us yours in the comments below!
