Forums - Nintendo Discussion - Nintendo buys back 1 millions of own shares...But what does it mean ?

They do this when they think the stock in undervalued.

They've done that a lot in the past. Especially just before the Wiiwas ready to come out. They bought a lot of stock then.

And sure enough, about six months later the price went up like crazy.



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JWeinCom said:
It probably means that they think their stock is going to be more valuable in the future, so they want to buy it to resell it. It could also be a case where they don't own enough of their own company, and want to buy back some stock to prevent a takeover... but more likely the former.

The latter is still a good idea.



Amnesia said:

So they rarify the quantity of shares available, making its more difficult to buy then so it lift up the value ?
My banker told me : "don't worry, with 14 units you will always find a buyer instantly, it is a tiny quantity". But then if someone wants to buy 14000 units in once, because Nintendo will have rarified it by letting 1 million less available today, the guy who want to buy 14000 units will have to put more money on the table to convince other holders to sell ? So this increases the selling cost of the share ?

Another question :
is this quantity, the quantity of buy/sell performed on the last open day of trade ? or is this the total number of share in the different quotation places ?

That looks like daily volume to me, but it could be weekly or monthly depending on the context.
https://www.rediff.com/money/special/trading-volume-what-it-reveals-about-the-market/20090703.htm

Nintendo has about 142m outstanding shares, so it is definitely not the total available.
https://www.nintendo.co.jp/ir/en/stock/information/index.html

And yes, in reference to your first paragraph, buying back shares increases their value.  They did you a favor.  Now your stock is worth more.

Last edited by The_Liquid_Laser - on 24 February 2019

VAMatt said:

Ultimately, it means Ninty doesn't see a better use for their cash. 

Pretty much this. Nintendo has been highly profitable recently, so they have cash in their coffers. What do you do with (lots of) cash lying around?

a) Put it into your bank account. With interests pretty much at 0%, that's not a good idea.

b) Invest it, either real estate or stock market. N isn't exactly a real estate company, so the stock market it is. They can either buy "foreign" stock or their own. In the second case, they get dividends at years end as a bonus. If the stock price goes down, the company's worth decreases, so less taxes. If the stock price goes up, more taxes but not to the point your increase in net worth is really "used up". (Also you can sell stock again at higher prices if you need money, and also the risk of an unfriendly takeover could be reduced).



zorg1000 said:
Basically they believe their stock price is undervalued so they will do a buyback and offer the stock again at a later time when the prices have gone back up. At least that's how I understand it.

That is my understanding of it too,

 

Microsoft are the kings of flipping their own shares lol.



 

 

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" In the second case, they get dividends at years end as a bonus"

 

This is the part I really don't understand, that they get dividends, from themself.

I thought that the dividends was just a reward they provide, to maintain an"interest" for the shareholder to let the money in.



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