Increasing the market cap from a buy-back is possible.When doing...

Increasing the market cap from a buy-back is possible.

When doing a buy-back, the company loses cash in the process, so if the share price was truly efficiently priced and accurate for the value of the company, then the market cap would actually fall by the amount of the cash expended. If truly efficient, the share price would remain stable.

But as is well known, when a new big buyer enters the market, the balance of buyers:sellers changes, and the SP generally rises. Eg. if I wanted to buy $100k of shares, I'd be forced to push up the SP by a bit. The SP may rise enough that the market cap in fact rises even after reducing shares on issue, even though logically it shouldn't.

Say I bought $100k and drove the SP up 3%. Even if I burned those shares, it's only 0.03% of shares on issue. So the market cap would be up by about 2.97%. The intention of the buy-back would be slow and steady to avoid this situation - avoid driving up the SP more than necessary.