Prosus, the Amsterdam-listed technology investor, has spent roughly $49.6 billion buying back its own shares since June 2022. According to Bank of America, those repurchases have been a key reason the company's stock has not traded at an even wider discount to the value of its listed holdings.
But the bank also flags a slowdown. In the week of October 26-30, Prosus repurchased about $90 million of stock, well below the roughly $157 million weekly average since the program began. If that pace continues to cool, buybacks will do less to stabilize the discount, and investors will likely pay more attention to the company's first-half fiscal earnings.
What is Prosus and why does the discount matter?
Prosus is a holding company, meaning most of its value comes from stakes in other businesses. Its largest asset is a 26% stake in Tencent, the Chinese internet giant, but it also owns food delivery businesses like iFood in Brazil and Just Eat Takeaway.com in Europe.
When a holding company's shares trade below the market value of its underlying assets, that gap is called a conglomerate discount. It can happen for many reasons: investors may worry about governance, taxes on unwinding, or simply prefer to own the underlying assets directly.
Buybacks are a powerful tool for holding companies because they can "capture the discount." When Prosus buys back its own shares at a price below the net asset value (NAV) per share, it retires claims on the portfolio that were priced too cheaply. That mechanically increases the NAV per share for remaining shareholders.
Bank of America estimates Prosus has repurchased about $35.7 billion of stock since June 2022, representing roughly 30.4% of shares outstanding. Its parent company, Naspers, has bought back about $13.9 billion, or 27.8% of its shares. Together, these programs have been a steady source of demand for the shares.
Why the slowdown matters
The effectiveness of buybacks depends on two things: the discount staying wide enough to make repurchases accretive, and the buying being consistent enough to create ongoing support. If the pace slows, there is less discount capture and less incremental support for the share price.
That is why the recent weekly figure of $90 million, versus the $157 million average, is notable. It suggests the buyback engine may be losing some steam. If that trend continues, the discount will likely become more sensitive to fundamentals.
In that scenario, the market will focus more on Prosus's first-half fiscal earnings, due to be reported soon. Bank of America says the market is effectively valuing the food delivery assets—Just Eat Takeaway.com and iFood—at less than zero. That means any positive update on those businesses could have an outsized impact on the stock.
What it means for investors
For everyday investors, the key takeaway is that buybacks are not a permanent fix. They can support a stock for a while, but if the pace slows, the underlying business performance matters more.
Prosus's situation is a reminder that holding companies often trade at a discount, and buybacks are one way management can narrow that gap. But the discount can widen again if investors lose confidence in the underlying assets or if the buyback program is scaled back.
Investors should watch the upcoming earnings report for any commentary on Just Eat Takeaway.com and iFood. If those businesses show improvement, it could help the stock even if buybacks fade. Conversely, if they disappoint, the discount could widen.
For context, other companies have used buybacks to support their shares. For example, Garanti BBVA's large buyback recently boosted Turkish bank stocks, and China's central bank cut its buyback loan rate to encourage similar moves. But as Prosus shows, the impact depends on the scale and consistency of the program.
Ultimately, the next test for Prosus is its earnings. If the buyback anchor weakens, the market will look to the fundamentals of its portfolio companies to justify the valuation.
