The A2 Milk Company Ltd (ASX: A2M) share price is having a disappointing day.
In afternoon trade, the infant formula company's shares are down 1.5% to $5.48. This compares unfavourably to the ASX 200 index and its sizeable gain of 1.5%.
Investors may be surprised with the performance of the A2 Milk share price on Wednesday. That's because today is a big day for shareholders.
Why is today a big day?
When A2 Milk released its full year results in August, the company announced that it was finally returning some of its hefty cash balance to shareholders via an on-market share buyback.
The company is planning to return NZ$150 million to shareholders through the purchase of up to 37,180,621 shares over the next 12 months at the prevailing market price. This represents 4.99% of its total shares outstanding.
Last week, A2 Milk revealed that today is the day that the on-market share buyback will commence.
However, rather than sending the A2 Milk share price higher today, the company's shares are underperforming the market and dropping into the red.
What's going on with the A2 Milk share price?
Just because a share buyback is underway, doesn't necessarily mean that a company will be actively buying shares on a particular day.
It could be that the company and its advisers are waiting for a better entry point or are buying small parcels of shares on a regular basis in order to not artificially inflate the A2 Milk share price. After all, if the price gets too high, it won't be able to buy as many shares with its funds.
It is also worth noting that the company is not obliged to buy shares and can "suspend without notice or vary or terminate the buyback programme at any time."
Investors will just have to sit tight and wait for updates on the buyback in due course to see how things progress.
