StreetAlpha

Does the buyback blackout period move stocks? A backtest

Most companies stop buying their own stock in the weeks before they report earnings, then start again once the window opens. Some traders think that makes heavy buyers stronger after earnings, or that the price a company paid acts as a floor. We tested both on S&P 500 stocks.

No edgeHeavy buyers did no better once their buyback window opened, and stocks that fell below the price the company paid did not bounce.
Earnings reports tested16,849
Open window minus blackout, a month−0.02%
Dips below the price paid1,327
Against other dips, 20 days−0.38%

Companies do buy less in the quiet weeks before they report. But that pattern is well known, and it did not show up in prices.

The rules we tested

  • Heavy buyers: the top 20% of S&P 500 members by buyback yield at the start of the month of their earnings report, using only figures already filed.
  • Open window: the 20 trading days starting 2 days after the earnings report. Blackout: the 15 trading days ending 2 days before it.
  • Test 1: heavy buyers against everyone else in open windows, minus the same in blackouts. If buybacks hold prices up, that should be positive.
  • Test 2: a company that spent $100 million or more in a quarter, then closed 5% or more below the average price it paid before its next report. Buy that close and hold 20 days.
  • Test 2 comparison: the same 5% dip for companies that bought less than $10 million that quarter, measured from their own average price.
  • Judged against: the average S&P 500 member over the same days. Test 1 runs from 2018; test 2 from late 2023, the start of the monthly buyback tables we read.
Heavy buyers after earnings minus before earnings: average result a month, by year
0%−0.54%2018−2.46%2019+1.95%2020+0.72%2021−0.70%2022−0.96%2023+0.49%2024+1.98%2025+0.38%2026

Above zero means heavy buyers did better in the open window than in the blackout. The years swing both ways. 2025 and 2026 include the held back months.

When companies actually buy

  • First month of the quarter: 25% of the quarter’s buying.
  • Second month: 37%.
  • Third month: 38%.

Across 4,540 company quarters of monthly buyback tables, buying was lightest in the first month, when most companies are in their quiet period before reporting. By calendar month, January, July and October were the lightest, each about 6.5% of the year’s buying, and March was the heaviest at 11%.

Is the price a company paid a floor?

We found 1,327 times a company that had just spent $100 million or more closed 5% or more below the average price it paid. Over the next 20 days those stocks did 0.19% better than the average S&P 500 member, but the same dips in companies that were not buying did 0.83% better.

Month by month, the buyers trailed the comparison by 0.38%. That is not different from luck, and it is certainly not support.

The most recent 18 months

In the most recent 18 months, held back and checked separately, heavy buyers did 1.11% a month better after earnings than before, but the result swung widely and was ahead in only 9 of 16 months, not enough to tell apart from luck. Dips below the price paid trailed other dips by 0.60% a month.

What it means for your trading

  • Do not count on a company to defend its stock just because it has a big buyback program.
  • The price a company paid for its own shares is not a support level.
  • Buyback timing is useful context for reading a filing, not a trading signal.

Limits: S&P 500 stocks only. The price paid test starts in late 2023, a short history, so treat it as a first look.

Buybacks and the price paidSee what each S&P 500 company spent, what is left in its program and the average price it paid.Open →

Buyback timing questions

What is a buyback blackout period?

Most companies stop buying back their own stock for a few weeks before they report earnings, while they know results the market does not. Buying usually starts again a few days after the report.

Do stocks rise after the buyback blackout ends?

Not for heavy buyers in our test. From 2018 to May 2025, heavy buyers did no better against other S&P 500 stocks after earnings than before: the difference averaged −0.02% a month.

Does the price a company paid for its shares act as support?

Not in our test. Stocks that fell 5% or more below the average price their company had just paid did 0.38% worse over the next 20 days than similar dips in companies that were not buying.

When in the quarter do companies buy back the most stock?

Later in the quarter. Across 4,540 company quarters, 25% of buying happened in the first month, 37% in the second and 38% in the third.

Related tests

No edgeStock buybacksThe companies spending the most on buybacks did about the same as the average S&P 500 stock. The biggest issuers of new stock did lag.No edgeEarnings gap upNone of the three versions beat the average stock. The drift that research found decades ago did not show up in this period.No edge50 day bounceBounces off the 50 day did no better than the average stock, or than other stocks in an uptrend.All backtestsEvery strategy we tested, with the verdict

Backtest results are hypothetical. They are based on historical prices, include a simple trading cost and leave out taxes and other costs of real trading. Past results do not guarantee future returns. For informational and educational purposes only. Not investment advice, and not a recommendation to buy or sell any security.