On July 15, Sasha Ivanov (the creator and CEO of Waves) announced that in the coming weeks he intends to buy back 2 million WAVES tokens from the open market.
What is a Buyback?
Buyback means that a company buys its own shares in order to reduce their number on the open market. Companies buy the shares back for a number of reasons, the main one being the desire to increase the value of other available shares, for example by limiting supply. When companies feel undervalued, they may decide to buy back to provide investors with a return. Reducing the number of shares on the market leads to an increase in the earnings of shares held by stakeholders. Buyback increases the proportion of earnings allocated per share. If the same price-to-profit ratio is maintained it later increases the value of the share.
Why do companies decide for a buyback?
Redemption makes each value a bigger percentage of a corporation. In this way, EPS (an economic indicator determining the earnings per share) increases, while the indicator of price to profit decreases or the price of shares increases. What benefits do investors have from this? Buyback shows them that the company has enough money for emergency situations. Another reason for a buyback is compensation. Companies often buy back shares and spend them on employees and management (it is a form of reward). It helps to a large extent avoid the dilution of existing shareholders.
The buyback of WAVES tokens
From the tweet posted by Sasha Ivanov, we can read that the buyback is to be eventually used for the development of the whole Waves ecosystem.
Opinions of recipients of this information were slightly divided. Some people regarded the planned action as an attempt to inflate the price of the token. It should be added that the CEO of Waves does not hide the fact that his goal is to support the company.
There would be nothing surprising in the wave of unfavorable comments was it not for Sasha Ivanov who some time ago posted on his Twitter account a questionnaire which enabled the crypto-credit community to decide whether the decision to buy tokens was correct. It turned out that as many as 85% of people were in favour of this.The opponents constituted only 15%. Skeptics claim the initiative is the result of a negative trend, as Waves has seen a significant decline in value in the past months.
Currently WAVES token price amounts to USD 1.47.