What it is
Treasury stocks are stocks that a company previously issued but later bought back from the stock market or reacquired through other legal means.
A company may hold on to treasury shares, resell them, or cancel them to take them out of circulation permanently.
What it means for you
Treasury shares are no longer traded in the open market and so they don’t grant stockholder rights such as voting rights. They are also not entitled to dividends.
When shares are taken off the market and put into a company’s treasury, the number of outstanding shares held by all shareholders decreases.
With fewer supply, you may see an increase in share price after a buyback, though this isn’t guaranteed.
There are many reasons for a company to keep or repurchase stocks for its treasury. They may do so to resell the shares later, increase the ownership stake of existing shareholders, or improve financial ratios on their balance sheet, among others.
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