What happened
Nano Dimension (NNDM -0.41%) investors didn't exactly have a bad case of the Mondays at the kickoff of this trading week. That's because their stock saw a nice pop of more than 7% in price on the day, well exceeding the 0.9% increase of the S&P 500 index. That share price jump was due largely to an investor-pleasing measure announced by company management.
So what
Investors tend to love when their company announces a share repurchase program, as such moves tend to provide support for a stock's price. This is why they greeted Nano Dimension's news of a new buyback initiative so warmly.
The 3-D printing specialist said its board of directors has authorized such an initiative for the company's Nasdaq-listed American Depositary Shares (ADSs). This allows Nano Dimension to purchase up to $227.5 million worth of the securities. The company did not specify an expiration date for the program.
As usual with such programs, it did caution that it was not obligated to repurchase ADSs, and the initiative could be canceled at any time.
Now what
While $227.5 million would be relatively small-scale for many companies on the exchange, it's potentially very significant and important for Nano Dimension. That's because the company's market cap stands at barely over $757 million. Even if it ends up repurchasing only half the maximum amount, such buys could quickly ramp up interest in the stock and, hence, its share price.
A note of caution is warranted here, though. The most durable price improvements in stocks typically happen when a company demonstrates it can grow its fundamentals; they tend not to occur with financial engineering plays like stock buybacks. Investors would do well to keep their eye firmly on Nano Dimension's results instead.
