Facebook has announced that 2017 will be a year of increased expansion. In its first repurchase program, a move to placate its shareholders, the company will buy over $6 billion back in shares.
This move will happen during the first quarter of 2017 and although the company has $26 billion in cash and other marketable profits, only some of that will be used in the buyback process while the rest will go toward the growth and expansion of the company.
Facebook isn’t the first business using buybacks to keep its shareholders content. In fact, the company joins a long line of U.S. technology firms like Apple Inc., who started in 2012, and Alphabet, who joined later in 2015, who are using this trend. Following the announcement, Facebook shares rose 1 percent during after-hours.
The rise in digital advertising has left businesses like Facebook with billions of dollars that can be put toward profitable uses. “Facebook is very efficient with its capital and how it uses that capital. Although some people took issue with their choice at the time, they clearly saw value,” said Brian Wieser an analyst at Pivotal Research Group.
According to Boomerang data on companies that are worth more than $5 billion, U.S. technology businesses have spent over $131 billion in the repurchasing of share since 2012. Facebook has also risen from $2 billion to $2.9 billion just from share trading. Hopefully, the business’s repurchases will keep that number steady in the upcoming years.
The year of 2017 will open the door for so many increased spending opportunities for Facebook. The company plans to further its growth by hiring more engineers. This and other expansions of its infrastructure might be able to aid in returning value to shareholders while other long-term investments begin to unfold in the upcoming future.
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