While repurchasing shares can have several benefits, it also comes with limitations and risks:
Financial Flexibility: Using cash reserves to repurchase shares can limit a companyâs ability to invest in new opportunities or weather economic downturns. Market Perception: Investors might interpret buybacks as a lack of growth opportunities, which could negatively impact the company's stock price. Regulatory Risks: Stock repurchases are subject to regulatory scrutiny and must comply with legal requirements, which can pose risks if not properly managed.