What is a buy back guarantee and why does a company do it?
Long-term growth is encouraged through buybacks. Investors are encouraged to “hodl” the token, which helps to maintain the asset’s price stability. However, all the grounds for buybacks are open to criticism because they elicit an immediate reaction from the community, which begins to question the reasoning behind such choices.
In the crypto world, buybacks are like their traditional financial market counterparts, which are used to modify the number of a company’s assets in circulation. There are a variety of motivations for such programs, but the ultimate result is usually a significant increase in the asset’s value.
A stock buyback, or share repurchase, is when a company repurchases its own stock, reducing the total number of shares outstanding. In effect, buybacks “re-slice the pie” of profits into fewer slices, giving more to remaining investors.
A stock buyback is one of the major ways a company can use its cash, including investing in the operations, paying off debt, buying another company and paying out the money as a dividend to investors.
Buybacks can create value for investors in a few ways:
- Repurchases return cash to shareholders who want to exit the investment.
- With a buyback, the company can increase earnings per share, all else equal. The same earnings pie cut into fewer slices is worth a greater share of the earnings.
- By reducing share count, buybacks increase the tokens potential upside for token holders who want to remain owners. If the company is worth $10 billion, but is split fewer ways, each share is worth more.
Cannfinity guarantees buy backs at the rate of initial IPO price. This briefly means:
1) Secure environment for the newbies to feel the water without any fear of losing their initial investment.
2) Cleansing of the faint hearted and noobs to provide sustainable profit for the “laser eyes” / “diamond hands” if you know what we mean.
In both ways it reflects one solid reality; A company that can do this is a trustworthy and professional company that is here for the long successful run.
