im tracking down the AVs sector for a long time now and recently WeRide Q4 doubled their revenue, narrow losses by 34% and they also announced $100M buyback which has me considering the cash incinerator label for this industry. Companies like Tesla or Aurora are looking for the next multi billion capital raise and WeRide actually pivot to returning capital is a huge psychological shift to me. The management signals they've hit a commercialization inflection point where they no longer need to hoard every cent just to keep the light on. Product revenue jumped 310% last year, 1100 vehicles are scaled globally. Seeing this like a breath of fresh air in the market right now.
when a company announces buyback program, does this mean a good signal?
byu/Relative-Anywhere-77 ininvesting
Posted by Relative-Anywhere-77
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“However, WeRide reported an operating loss of RMB 1.85 billion (USD 268.3 million) and a net loss of RMB 1.65 billion (USD 239.3 million). Even after narrowing from 2024, those losses remained more than twice annual revenue.”
Generally a buyback signals that (a) management feels their stock is undervalued and (b) they have excess cash that they can use to repurchase stock. However, not every company that announces a buyback actually executes the buyback. Sometimes they just think it’s a best practices sort of thing to have one authorized so that if their stock falls 40% some morning they can step in to stabilize things. Alternatively, they might be just trying to put out a press release to try to get their stock back up. So, before you get too excited, see if the company actually repurchases any shares. Also, see if insiders are using their own cash to buy shares in the market.
A former employer of mine announced a buyback and then never executed. The stock price bumped up on the announcement, the timing of which worked out well for the C-suite’s compensation packages.
This kind of manipulation is why stock buy backs used to be effectively illegal.
If company doesn’t make money consistently, then buyback makes no sense. The stock price jump may allow the company to execute an ATM (if any) at a higher price or capital raise at better terms.
Think about it, where’s the money coming from if the company needs to burn the money to fund operations
they started buyback today, just saw that on HKEX filing, about 213k shares at $17.50