For the first time in its relatively young life, Global-e Online (GLBE 1.54%) is embracing a popular activity most investors love. On the announcement of its inaugural stock buyback program, many market players flocked to the e-commerce facilitator, sending its share price up by just under 5% on Thursday. This compared extremely well to the frothy S&P 500 index's 0.8% increase.
Two-hundred million new reasons to be bullish
Just before market open that day, Global-e Online announced its board of directors had authorized a share repurchase initiative of up to $200 million. As is typical with such programs, this one allows the company to buy its shares through a variety of methods, including transactions on the open market. It is authorized to do so from time to time, as it sees fit.
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The company did not set an end date for the program.
At the most recent closing stock price, that $200 million would buy just over 5.7 million of Global-e Online's ordinary shares. At the moment, the company has just below 170 million shares outstanding.
In its press release trumpeting the new initiative, Global-e Online quoted CFO Ofer Koren as saying that it "demonstrates our continued confidence in our ability to drive strong cash flow generation and our ongoing commitment to increasing shareholder value."
"We have built a healthy balance sheet enabling us to continue to invest in our strategic initiatives while also returning capital to shareholders," he added.
A good sign, at the end of the day
The launch of a stock repurchase program is quite a milestone. Indeed, it conveys that a company's balance sheet is strong enough, and its cash flow is sufficiently robust, for such a measure. While I personally believe most companies could better deploy capital by building out their businesses rather than self-purchasing their equity, this is undoubtedly a demonstration of financial strength and health.
