Stratasys authorises $50 million share repurchase program – what does it mean?

The Atomic Layers: S2E17 (00043)

Atomic Layer of the Day:

Stratasys announced share repurchase program, which allows the company to buy back up to $50 million worth of its own shares. This move is often used by companies to increase the value of remaining shares by reducing the overall number in circulation. It can make the shares more attractive to investors and indicate that the company believes its stock is undervalued.

Stratasys’ stock has dropped from $14.00 at the beginning of the year to $7.00 right now. That’s a lot. According to Kerry Stevenson from Fabbaloo, the current market valuation of Stratasys is $501 millions (three times less than Chinese BLT). So repurchase program is the method they want to use to prop up their stock price.

Company will buy back shares to return cash to shareholders and make the remaining shares more valuable by reducing supply. This is intended to increase shareholder value and boost investor confidence.

Stratasys is planning to buy back shares in various ways, including market purchases or negotiated deals, using cash from their balance sheet or ongoing cash flow generation. They aim to fund the buybacks through cost-saving measures.

In case you don’t rememeber, few weeksago Stratasys announced a restructuring plan that involves laying off 15% of their workforce, and saving them around $40 million.

In short, Stratasys is not committing to buying 50 million shares directly. Instead, they are authorizing a buyback program worth up to $50 million in total, depending on various conditions such as their cash position, market trends, and financial results. The repurchase plan gives them flexibility in how and when they buy back shares.

The question remains: what for…?

The company has long been operating at a loss. Its market share is steadily declining, and sales are slowly decreasing. The only seemingly reasonable move would be a share buyback from the market in preparation for a potential sale of the entire company. However, at this point, there isn't a single rumor suggesting that such a thing is even in the works.

It's hard to say what the bigger plan is…?

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09-17-2014: Dremel released the Idea Builder.

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