Are Buybacks Back? 2024 Showing Improvement After Hitting a Low Last Year
After falling to their lowest level last year (in Wall Street Horizon's eight years of data), the total number of announced global corporate buybacks has been improving throughout 2024. Higher borrowing costs and recession fears have a tendency to lead US corporations to hoard cash rather than allocate it to stock repurchase programs, which have been popular in the last decade. However, as the Fed begins to lower interest rates and the economy remains strong, certain companies are starting to spend again.
Heading for $1 Trillion with a Capital T
In 2023, only 617 companies announced buybacks, and that was after only 649 announced in 2022, as compared to 1,319 companies doing so in 2021 and 947 in 2020, despite the disruption caused by the COVID-19 pandemic. The large amount of buyback announcements in 2021 led to a total of $922B in repurchased stock for S&P 500® companies in 2022, an all-time high. That fell to $795B in 2023.1
With the Federal Reserve cutting interest rates by a half point two weeks ago, buyback activity is likely to pick up, and continue the upward trend seen thus far in 2024. Goldman Sachs predicts the total to reach $925B this year, surpassing the 2022 record, and moving on to cross the trillion dollar mark in 2025. 2
Thus far in the first three quarters of this year, we have recorded 565 buyback announcements for global, publicly traded companies. This is compared to 440 in the first three quarters of last year, and the 5-year average of 715.
