AOL Shares Popped: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: AOL (NYS: AOL) popped 22% in intraday trading today after announcing a stock buyback program.
So what: The company's board approved a $250 million stock buyback program that began yesterday and is slated to continue through the coming year. CEO Tim Armstrong said AOL believes the buyback "makes sense" as the company "continues to execute its strategy" and expressed confidence in the company's growth prospects.
Now what: AOL's shares plunged yesterday after missing earnings expectations and issuing disappointing guidance. At today's intraday price of $11.73, $250 million would buy 21.3 million shares -- about 20% of diluted shares outstanding. While the lower share count should provide a similar unrepeatable boost to earnings, it doesn't address investor concerns about whether the turnaround plan will work.
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At the time this article was published Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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