What Happened?
Shares of internet service provider Cogent Communications (NASDAQ:CCOI) fell 9% in the afternoon session after the company gave back some of its gains from the previous session. The drop followed a 6.8% rise during the prior trading day. That earlier jump was driven by the board of directors' decision to authorize the resumption of the company's stock repurchase program. Stock buybacks often signaled management's confidence in a company's future, which investors typically viewed in a positive light. However, the subsequent fall in the share price occurred without any new company-specific information being released.
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What Is The Market Telling Us
Cogent’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates 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 about 24 hours ago when the stock gained 6.8% on the news that its board of directors authorized management to resume the company's stock repurchase program. This move signaled confidence from the company's leadership, especially as the announcement came when the stock traded near its 52-week low after having fallen over 75% year-to-date. A stock buyback, where a company purchases its own shares from the open market, often suggested that management believed the stock was undervalued. The company stated it might purchase shares from time to time depending on market, economic, and other factors. However, the program did not obligate Cogent to acquire any specific number of shares.
Cogent is down 76.9% since the beginning of the year, and at $17.80 per share, it is trading 78.8% below its 52-week high of $83.79 from November 2024. Investors who bought $1,000 worth of Cogent’s shares 5 years ago would now be looking at an investment worth $305.00.
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