What Happened:
Shares of 3D printing company Stratasys (NASDAQ:SSYS) jumped 8.2% in the morning session after the company announced a $50 million share repurchase program. Chief Executive Officer Yoav Zeif noted that the move is part of the company's commitment to maximizing shareholder value as it continued the drive to generate more cash following recent cost optimization moves.
Recently, Stratasys embarked on restructuring efforts to produce approximately $40 million in annual cost savings starting from Q1'2025. The initiative also includes plans to reduce its workforce by 15% by the end of the year.
The stock's reaction suggests the market approves of the move. Notably, the repurchase reduces the total shares in circulation, improving the ownership stake of existing shareholders. This increase in ownership stake could result in shareholders receiving a larger portion of future profits or dividends.
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What is the market telling us:
Stratasys’s shares are somewhat volatile and over the last year have had 18 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 18 days ago, when the stock dropped 20.7% on the news that the company reported second-quarter earnings results. Its full-year revenue, EPS, and EBITDA guidance fell short of Wall Street's estimates.
Moving on, the company announced plans to restructure its operations, and this effort will result in the elimination of 15% of its workforce. Overall, this was a weaker quarter.
Stratasys is down 45.9% since the beginning of the year, and at $7.65 per share it is trading 48.4% below its 52-week high of $14.82 from December 2023. Investors who bought $1,000 worth of Stratasys’s shares 5 years ago would now be looking at an investment worth $309.50.
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