There are caricatural cases, such as RH, formerly Restoration Hardware, which is playing double or nothing and betting everything on massive, one-off share buybacks financed by a dramatic increase in debt. See Will RH become the "meme stock" of 2025?

There are cases of epic value destruction, which were predictable given that the share buybacks were always carried out at overly high valuations, often for the wrong reasons: to prop up the share price, to reach stock option vesting thresholds, etc.

Amongst other distressing examples, see Intel falling behind TSMC financially, Boeing: programmed suffocation, or The group that owns The North Face is on the verge of bankruptcy.

There are also cases of outright success, where share buybacks, because they are well timed, i.e., carried out when the valuation shows a clear discount on intrinsic value, are, on the contrary, perfectly inspired and lucrative for long-term shareholders.

See, for example, Oracle: New fundamentals and an unanswered question, Shell confirms its major strategic shift, and European banks reward their shareholders.

Then there are more ambiguous cases, such as Adobe, whose share price is currently exactly the same as it was five years ago. However, over the same period, revenue, operating profit, and free cash flow have doubled.

The reason the share price has not followed these significantly improved fundamentals is that the valuation in 2020 was astronomical, at 60 times earnings, compared with a much more conventional multiple of 25x earnings today.

Between 2020 and 2025, Adobe's valuation averaged 45x earnings—a level the group considered legitimate for $35bn in share buybacks over the period, i.e., its entire cumulative free cash flow.

This raises the question of value creation: with these transactions, Adobe bought back 11% of its capital, which means that, broadly speaking, the group values itself at around $350bn—or rather, that it believes it represents a good investment at this valuation.

Why not? Except that the market currently values Adobe at $170bn, or half as much.