We recently published a list of 10 Companies That Are Buying Back Their Stock in 2025. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) against the other companies that are buying back their stock in 2025.
Stock repurchases are the most discretionary form of capital allocation and have also become over time the most dominant for the US corporations. Unlike dividends, which create a recurring obligation, or capital expenditures, which are often a necessity to maintain the business operations going, buybacks offer flexibility – companies can repurchase shares when excess cash is available and halt the program during downturns or when capital allocation priorities shift. A buyback reduces the number of outstanding shares, effectively increasing earnings per share, and are therefore often seen as a form of instant gratification – prefer immediate upward pressure on stock prices over long-term gains from strategic reinvestments. Critics argue that buybacks can signal a lack of attractive reinvestment opportunities in the core business, as firms would most likely prioritize any potential project that could strengthen the competitive position and boost the growth trajectory. While such scenarios are certainly possible in some cases, proponents view stock repurchases as a natural adjustment to limited or uncertain growth opportunities or a way to return excess cash to investors in a more tax-efficient way than dividends.
Also read: 10 Technology Stocks with Insider Buying in 2024
One of the primary reasons behind stock buybacks is to support the share price during periods of economic uncertainty or market volatility. It is well known that the management possesses insider information and has much greater visibility into the business trajectory; thus, when a company perceives that its stock is undervalued and repurchases significant amount of its own stock, it can signal confidence and boost morale among the entire shareholder base. Successful investors like Warren Buffett have spoken favorably about buybacks when executed at prices below intrinsic value, emphasizing that they can be an intelligent use of capital when alternative investments offer lower returns. However, buybacks have also faced scrutiny for their potential to artificially inflate stock prices and reward executives who are compensated based on EPS growth. The debate intensifies when companies borrow money to finance these operations, which can strain balance sheets in times of economic distress and depletes the cash reserves without any claw-back option.
Recent legislative developments have placed buybacks under greater regulatory and tax scrutiny – the Inflation Reduction Act of 2022 introduced a 1% excise tax on stock repurchases, aimed at curbing excessive reliance on buybacks and encouraging reinvestment in business operations and employee wages. In short, the purpose behind these regulatory attempts was to limit the hoarding of capital into investors’ hands and stimulate reinvestments that would fuel economic growth and create jobs. Despite this, repurchase activity remains robust, with S&P 500 firms continuing to allocate substantial capital to buybacks. For reference, data published by S&P Global shows that the total dollar volume of stock repurchases during 3Q 2024 increased 22% YoY. Some investors argue that government regulations will have limited impact, as corporations may simply adjust capital allocation strategies or increase leverage to maintain shareholder returns. As the US stock market experienced a strong rally throughout 2024 and reaching new all-time highs in the second half of the year extending into 2025, studying companies that repurchase significant amounts of their own stock may offer unique insights into their business; the key question to answer though is whether these operations signal an undervalued stock price or a lack of profitable reinvestment opportunities in the near-term.
Our Methodology
For our list of companies that are buying back stock we selected the top 10 companies in the S&P 500 index with the largest dollar volume of shares repurchased during Q3 2024, as reported by the S&P Dow Jones Indices. We ranked them according to their buyback activity for the quarter and also added the number of hedge fund holders for each company in this analysis.
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A team of developers working in unison to create the company’s messaging application.
Meta Platforms Inc. (NASDAQ:META)
Q3 2024 buybacks: $12.36 billion
Number of Hedge Fund Holders: 262
Meta Platforms Inc. (NASDAQ:META) is a global technology company at the forefront of social media, digital advertising, and the metaverse. Best known for its platforms – Facebook, Instagram, WhatsApp, and Messenger – META connects billions of users worldwide while providing businesses with powerful advertising and engagement tools. The company is heavily investing in AI and VR/AR through its Reality Labs division, aiming to build the next generation of immersive digital experiences.
Meta Platforms Inc. (NASDAQ:META) was among the top performers of 2024 with its share price up more than 40% in the last twelve months. The company ended 2024 with strong performance, reaching over 3.3 billion daily active users across its family of apps. Meta AI has emerged as the most widely used AI assistant, with more than 700 million monthly active users. Threads has shown significant growth, reaching more than 320 million monthly active users with over 1 million daily sign-ups. WhatsApp has gained momentum in the US with more than 100 million monthly active users, while Facebook maintains a strong global presence with over 3 billion monthly active users. The company announced substantial infrastructure investments, including plans to bring online almost a gigawatt of capacity in 2025 and build a 2-gigawatt AI data center. Meta’s 2025 capital expenditure is projected to be in the range of $60 billion to $65 billion, primarily focused on AI infrastructure and core business development.
The company’s spending policy in the last 2 years demonstrates that it has a myriad of reinvestment opportunities to build the AI infrastructure as well as fuel R&D in the AR/VR field. At the same time, the record financial performance has led to record operating cash flow generation, and it is reasonable to expect that some of the capital will be returned back to investors through stock repurchases, which might be a higher-ROI option than hoarding it on the balance sheet at a 4% money market rate. All in all, we believe the whopping $12.36 billion of repurchases in 3Q 2024 should not be interpreted as a negative signal for META.
Overall, META ranks 4th on our list of companies that are buying back their stock in 2025. While we acknowledge the potential of META as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.