Why BlackLine Stock Zoomed More Than 7% Higher Today

BlackLine (BL +1.05%) stock was well in the black on Tuesday, and that’s an understatement. News that it’s devoting many millions of dollars to refreshing its stock buyback program excited market players, and they collectively bid the specialty tech company’s shares up by over 7% that trading session.

A $500 million commitment

In a regulatory filing that morning, BlackLine disclosed that its board of directors authorized an increase to its existing share repurchase program. $100 million has been added to the existing authorization, bringing the total to $500 million.

Image source: Getty Images.

This matters because BlackLine has lately put its money where its mouth is. So far under the program, management has repurchased just over $270 million worth of its common stock.

Such a strategy is sensible for these times. Like other software stocks, BlackLine has suffered notable declines in recent months as investors pivot out of such businesses on fears of disruption from artificial intelligence (AI). A boost in stock buybacks will hopefully provide some support and help draw investors back to BlackLine’s equity.

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NASDAQ: BL

BlackLine

Today’s Change

(1.05%) $0.40

Current Price

$38.59

Key Data Points

Market Cap

$2.3B

Day’s Range

$37.17 - $38.85

52wk Range

$31.75 - $59.57

Volume

1.1M

Avg Vol

1.2M

Gross Margin

75.21%

Back to the fundamentals

I don’t personally feel that any investor should rush into a stock solely on the strength of a buyback program; generally speaking, if a business isn’t doing well, even a generous repurchase scheme won’t support the price in the long term.

BlackLine is in better shape than its recent battering on the exchange might indicate, with a top-line figure that’s still heading north. Profitability is a bit erratic, though, so to me there are more attractive bargains in the beaten-down software space just now.