What happened
Shares of GoPro (GPRO -2.86%) got fired up this morning, and are rising 5.4% through 11:11 a.m. ET after the maker of high-definition action cameras announced plans to re-up its share buyback authorization after buying back $40 million worth of shares last year.
So what
In 2022, GoPro's board of directors authorized the spending of $100 million to repurchase cheap shares at attractive prices. (At one point last year, GoPro stock was down 54% from its price at the start of the year).
GoPro made good on much of that promise, spending $40 million on buybacks last year. With its share price still down 44% below where it started 2022, management is doubling down on its bet, announcing today that it's refilling its share buyback authorization to the $100 million level. There's no time limit set on when it must complete the buyback -- nor any guarantee that GoPro will spend the full $100 million. Nevertheless, management noted that it's already spent $5 million more on buybacks so far this year.
Now what
Investors seem encouraged by management's implied belief that GoPro shares are undervalued, and cheap enough to buy -- and are buying right alongside management today.
It's noteworthy that management says it will be using cash generated from operations to pay for its buybacks, rather than drawing down its bank account or going into debt to fund the purchases. In that regard, it's worth pointing out that GoPro generated plenty of cash for this purpose last year -- $117 million -- and that analysts polled by S&P Global Market Intelligence think the company will generate another $111 million in operating cash flow this year.
That's plenty of cash to keep the buybacks coming. And plenty of buybacks to keep investors excited as well.
