Buying back company stock is a highly effective way for businesses to reward their shareholders. Many people don't realize that it's also the most tax-efficient option compared to other common approaches, such as paying dividends. Unlike dividends, buybacks aren’t taxed twice. Plus, they keep capital in the business, allowing for further investment in growth opportunities and other key drivers.
That being said, investors should be interested in the reasons why management at Upwork Inc. (NASDAQ: UPWK) has recently decided to approve a $100 million stock buyback program, signaling one of two things, and maybe even both. The first message investors can take from this is that the quoted stock price may be well below the company’s true intrinsic value, and the second is that insiders themselves expect further upside.
