Connect with us

Markets

The Controversy Around Stock Buybacks Explained

Published

on

The Controversy Around Stock Buybacks Explained

The Controversy Around Stock Buybacks Explained

At face value, the notion of companies buying back shares in their own stock may seem pretty benign.

But as soon as trillions of dollars are being poured into any single cause – regardless of how innocuous it may sound – there is always the potential to make a lightning rod for controversy.

With stock buybacks totaling $1.1 trillion in 2018, they’re at the center of discussion more than ever before.

What are Stock Buybacks?

When publicly-traded companies want to return money to shareholders, they generally have two options.

The first is to declare a dividend, but the other is to repurchase its own shares on the open market.

Although it seems meta, stock buybacks are a way for companies to re-invest in themselves. Each buyback decreases the amount of shares outstanding, with the company re-absorbing the portion of ownership that was previously distributed among investors.

In other words, buybacks are somewhat analogous to buying out a business partner – they allow the remaining partners to own a higher share of the company.

Pro vs. Con

With the amount of stock buybacks rising to historic highs, they have been front and center in 2019. Here are what proponents and opponents are arguing about.

Pro Case:
Proponents of buybacks say that if they are done rationally, buybacks (like dividends) are just another way to return cash to shareholders. Stock prices for companies that have bought back shares are also higher, in general, than other companies on major indices like the S&P 500.

Con Case:
Opponents of stock buybacks say that they increase inequality, and that executives make short-term oriented decisions around buybacks that allow them to maximize personal gain. In other words, when a company probably should be investing in its people or its business, the company is instead giving money back to the wealthy owners – and only they benefit.

The Bottom Line

While both sides make a compelling argument for different reasons, the only real way to evaluate stock buybacks is based on the merits of individual companies.

If the company is returning money to shareholders because it is the best allocation of capital, then it can make perfect sense. If the company is doing it at the expense of growing its business and the wages of employees, one can see why stock buybacks may rub people the wrong way.

Click for Comments

Markets

Ranked: The Largest U.S. Corporations by Number of Employees

We visualized the top U.S. companies by employees, revealing the massive scale of retailers like Walmart, Target, and Home Depot.

Published

on

The Largest U.S. Corporations by Number of Employees

This was originally posted on our Voronoi app. Download the app for free on Apple or Android and discover incredible data-driven charts from a variety of trusted sources.

Revenue and profit are common measures for measuring the size of a business, but what about employee headcount?

To see how big companies have become from a human perspective, we’ve visualized the top U.S. companies by employees. These figures come from companiesmarketcap.com, and were accessed in March 2024. Note that this ranking includes publicly-traded companies only.

Data and Highlights

The data we used to create this list of largest U.S. corporations by number of employees can be found in the table below.

CompanySectorNumber of Employees
WalmartConsumer Staples2,100,000
AmazonConsumer Discretionary1,500,000
UPSIndustrials500,000
Home DepotConsumer Discretionary470,000
ConcentrixInformation Technology440,000
TargetConsumer Staples440,000
KrogerConsumer Staples430,000
UnitedHealthHealth Care400,000
Berkshire HathawayFinancials383,000
StarbucksConsumer Discretionary381,000
Marriott InternationalConsumer Discretionary377,000
CognizantInformation Technology346,600

Retail and Logistics Top the List

Companies like Walmart, Target, and Kroger have a massive headcount due to having many locations spread across the country, which require everything from cashiers to IT professionals.

Moving goods around the world is also highly labor intensive, explaining why UPS has half a million employees globally.

Below the Radar?

Two companies that rank among the largest U.S. corporations by employees which may be less familiar to the public include Concentrix and Cognizant. Both of these companies are B2B brands, meaning they primarily work with other companies rather than consumers. This contrasts with brands like Amazon or Home Depot, which are much more visible among average consumers.

A Note on Berkshire Hathaway

Warren Buffett’s company doesn’t directly employ 383,000 people. This headcount actually includes the employees of the firm’s many subsidiaries, such as GEICO (insurance), Dairy Queen (retail), and Duracell (batteries).

If you’re curious to see how Buffett’s empire has grown over the years, check out this animated graphic that visualizes the growth of Berkshire Hathaway’s portfolio from 1994 to 2022.

Continue Reading
HIVE Digital Technologies

Subscribe

Popular