Facebook unveiled a share buyback scheme worth up to $6 billion of its stock as investors prepare for slower growth in 2017. According to the regulatory filing in which the disclosure was made, the scheme begins in the first quarter of 2017 but has no expiry date, giving Facebook leeway to exercise some opportunism in the buyback. After the announcement on Friday, Facebook shares rose about 1 per cent in after-hours trading after being down 9 per cent over the past month.
Capital return programmes are an unusual strategy for a newly-public company like Facebook, as they are more closely associated with older companies facing a slowdown in growth. Earlier this month, Facebook warned investors of slowing revenue growth once the site reaches the maximum number of ads that can be shown on its news feed by mid-2017. Facebook also pledged to invest in expanding data centres, hiring new engineers and researching innovations.
Alphabet, who owns Google, went public in 2004 but did not repurchase its stock until last year. In contrast, Facebook went public in 2012 and has not been a target for activist investors who pressure Silicon Valley boards to redistribute earnings to their shareholders.
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