Facebook Announces It Will Buy Back Shares

Facebook Inc announced it would begin to buy back shares worth up to $6 billion, which is the first buyback program for the social media giant. The announcement is Facebook’s bid appease the shareholders awaiting results of big investments in new growth areas that hold some risk.

The stock buyback involves its Class A common stock. The company plans to start the buyback during the 2017 first quarter, said the company in one of its regulatory filings.

Facebook has more than $26 billion of cash and marketable securities on hand and is using some for buybacks, while planning to increases spending on expanding the business.

On the news, shares of Facebook increased 1% in Friday trading after hours. The company has joined a growing group of large technology firms in the U.S. using buybacks as a way to keep their shareholders happy.

The increase in digital advertising resulted in companies like Facebook and Google parent Alphabet with billions of dollars in cash and their investors complain often that it is not being put to use in a profitable way.

One analyst at an Internet research group said that Facebook is highly efficient with the capital it has and responsible with how that capital is used.

The analyst cited acquisitions in the multibillions of dollars of Oculus and WhatsApp during 2014. However, some have taken issue with the choices of the two companies at the time of their acquisition, but they have proved to have strong value.

Nevertheless, Facebook has not been part of the norm. Amongst the top 10 tech firms based in the U.S., ranked by their cash as well as marketable securities, Facebook is the only one that to date was not buying stock back.

Alphabet’s first buyback was announced back in October of 2015. Apple started its repurchases during 2012.

Technology companies based in the U.S. have doubled their share repurchases since the beginning of 2012 with total spent of $131 billion during 2015.

It is not as if Facebook has no other place to invest. The social media giant said during this year that 2017 would be the year of more spending, with particular attention to the hiring of engineers as well as expanding infrastructure.

These buybacks could bring value back to its shareholders, while other investments that are long run play out.

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