Buyback’s Back Alright

Forwarded this email by a friend? Subscribe here.

We have an eye on impact-focused companies here at FWIW. As anticipated, Warby Parker IPO’d yesterday, with a direct listing. But as TechCrunch points out, “there’s more to Warby Parker’s IPO than just the D2C [direct-to-consumer] category. It’s a public benefit corporation, which it says in its filing means that it is “focused on positively impacting all stakeholders” as opposed to merely shareholders.” The expansion of impact-focused companies listing on exchanges is good news for investors looking to invest in line with their values.

Buyback’s Back Alright

During the roaring ‘80s on Wall Street, laissez-faire economics was popular, shareholder interests were paramount, and regulators gave public companies the green signal to buy back their shares from shareholders.

A stock buyback reduces the total number of shares in the market, causing its price to rise. Investors enjoy a short-term bump in their asset’s value, and company executives may also benefit by selling their stakes at the right moment or unlocking new compensation incentives tied to share price milestones. The change in rules in the ‘80s meant companies no longer had to fear accusations of price manipulation when buying back their own stock.