Facebook plans $6-bn share buyback in Q1 next year

Facebook has authorised buying back $6 billion of its stock from shareholders, beginning the first quarter of next year, the company announced in a filing with the Securities Exchange Commission (SEC) on Friday.

The repurchase programme that will begin in the first quarter of 2017, will help create value for shareholders, especially when growth at the social networking company has slowed.

Facebook had, in its last earnings call, said that its growth would likely slow as a result of the company reaching its maximum advertising load. Facebook, which has historically grown at a very fast clip, is now expanding at a slow pace and needs something more than growth to create value for investors.

In a separate filing with the SRC, Facebook also announced that its chief accounting officer, Jas Athwal, is retiring.

Earlier this year, Facebook issued a new class of stock that would essentially keep Mark Zuckerberg in control of the company, enabling him to withstand any pressure from Wall Street. That helps Facebook to continue to make long-term decisions without having to play to the tune of industry watchers and investors.

Share repurchases may sometimes be useful for reducing the overall amount of outstanding shares.

Companies may authorise a share repurchase either to return value to shareholders (the company can also issue a dividend), to build up good will with Wall Street or to keep pressure off the company while investing in longer-term plays, such as growing its other platforms like Instagram and WhatsApp and investing in virtual reality.

''The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities,'' the company said in its filing. ''The program will be executed consistent with the Company's capital allocation strategy of prioritizing investment to grow the business over the long term.''

Facebook has been sitting on a large cash pile – about $26 billion in the bank – and investors may be wanting the company use that cash even while it invests heavily in growth and research and development.

The buy-back will also help Facebook, which saw its shares decline after its most-recent earnings, to boost share value and thereby its market cap.