At least $21 billion in fresh share repurchase programs have been unveiled this week alone, with PayPal Inc leading the charge and authorizing a new $15 billion buyback plan as it works with Elliott Investment Management to turn around its struggling shares.
Altogether buyback announcements for the second quarter earnings season have already surpassed 2018 highs, when companies said they planned to repurchase almost $400 billion of their own shares, according to data compiled by BNP Paribas. And the announcements may not be over yet, with more than 50 S&P 500 members still set to report earnings this week.PayPal and Moderna saw outsize share price jumps following their buyback announcements, adding 9.3% and 16% respectively on Wednesday.
For Wall Street strategists schooled in the logic of “buy low, sell high,” buybacks this year likely make complete sense. Companies like PayPal and Moderna have slumped more than 25% amid a boom-to-bust cycle for pandemic winners turned losers. By scooping up shares at a lower value, the company can theoretically resell them later on in a secondary offering, ideally at a higher price, to help raise additional capital.
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