Comcast (CMCSA) Stock Pops on Share Buyback News

  • Comcast (CMCSA) increased its share repurchase program authorization to a total of $20 billion.
  • Most likely, this is due to an anticipated U.S. tax on corporate stock buybacks.
  • CMCSA stock gapped up as traders reacted to this news.
CMCSA stock - Comcast (CMCSA) Stock Pops on Share Buyback News

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Telecommunications and entertainment company Comcast (NASDAQ:CMCSA) just disclosed its board of directors increased the company’s stock buyback program authorization to a total of $20 billion. It’s likely that Comcast is doing this because the U.S. government will soon impose a tax on corporate share buybacks. All in all, CMCSA stock investors seem pleased with Comcast’s announcement. After the opening bell rang, they immediately pushed the share price higher.

As part of the Inflation Reduction Act, which President Joe Biden recently signed into law, there will be a 1% tax on stock buybacks. The Washington Post suggests this tax “is currently small enough that it is unlikely to deter buybacks.”

Nevertheless, some companies will undoubtedly try to front-run this tax, which is set to take effect next year. For example, Comcast announced today that it’s ramping up its stock buyback program to a total of $20 billion. The company has already repurchased $9 billion worth of its Class A common stock this year.

What’s Happening with CMCSA Stock?

This isn’t to suggest CMCSA stock was up massively this morning. The market’s response was muted, with Comcast shares gaining around 1% after the market opened.

Still, it’s a sign Comcast’s investors are fine with the company’s massive share repurchase plan. It represents a doubling of Comcast’s buyback plan, as it stood at $10 billion in January of this year.

Today’s news wasn’t enough to make up for the technical damage that’s been done to CMCSA stock in 2022. The shares have fallen from $50 in January to less than $35 recently.

It might be a very good sign, though, that Comcast is doubling its stock buyback program. After all, a company doesn’t typically repurchase its own shares unless management is confident in its future prospects. So, for all we know, today’s announcement could be the start of a broader turnaround plan for troubled telecom giant Comcast.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


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