Shares of Light & Wonder (NASDAQ: LNW) rose slightly during Thursday's after-hours trading after the slot machine company unveiled a $1 billion share buyback program. 

The recently revealed buyback initiative takes the place of an earlier $750 million repurchase program that was set to end next February.

"As of June 13, 2024, the Company has exhausted the full $750 million share repurchase authorization and purchased 11.2 million common shares, or 11.5% of shares outstanding at the inception of the program. The average purchase price of $66.72 per share represents a 28% discount to today’s closing price of $92.35,” according to a statement issued by the Las Vegas-based company.

Light & Wonder's shares have increased by 12.47% year to date and by 39.5% in the past year. It is unclear if the $750 million buyback initiative led to those performances, but those share repurchases probably aided the gaming device manufacturer in becoming one of the top-performing gaming stocks during those times. 

The Significance of Light & Wonder Buyback 

Firms are not required by law to carry out declared buyback plans and they have the option to repurchase a portion, but not the entirety, of the specified dollar amount. 

For Light & Wonder, the newly announced $1 billion repurchase initiative could be significant, as the firm fully utilized the previous buyback plan, doing so nine months ahead of its expiration, indicating a strong dedication to repurchasing its shares. 

“Our prior program was an effective value creation tool and moving forward the new program will allow us to deliver further value to our shareholders while underscoring our commitment to driving profitable growth and upside beyond 2025,” said CFO Oliver Chow in the statement.

Firms conduct share buybacks at different intervals in the open market, but in a theoretical scenario, Light & Wonder could eliminate over 10 million shares if it invested $1 billion in repurchases in one day, relying on the stock's closing price of $92.35 from Thursday. 

Light & Wonder Financial Perspective Stable 

In January, Light & Wonder reaffirmed its 2025 consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) prediction of $1.4 billion, as emphasized by CEO Matt Wilson in the press release regarding the buyback. 

The company's initiatives to reduce debt have also been yielding results, as shown by the previously mentioned stock price trends. This offers adaptability in terms of reimbursing capital to investors. 

“Given the continued momentum in the business, and our March 31, 2024, net debt leverage ratio at the middle of our target range of 2.5 – 3.5x, we have significant optionality with regards to capital allocation,” added Chow.