A Key to Larry Ellison’s Wealth Creation: Years of Oracle Stock Buybacks

Oracle’s Larry Ellison. (Anna Moneymaker/Getty Images)

Unlike many technology companies, Oracle has taken stock buybacks seriously—and that is why its chairman Larry Ellison now rivals Tesla CEO Elon Musk as the world’s wealthiest person, with an Oracle stake worth about $387 billion.

Oracle shares were up 28% to $334 Wednesday in the wake of the company’s earnings report Tuesday.

Oracle’s share count has shrunk by almost 45% over the past 15 years to 2.8 billion shares. Ellison’s ownership stake of nearly 1.2 billion shares has risen to a 41% interest in the company from 23% over the span—as he kept his ownership stake virtually unchanged.

If Oracle had kept its share count flat since 2010, Ellison’s stake in the company probably would be worth around $215 billion, Barron’s estimates. (This calculation is based on the estimated stock price if the share count were 5 billion shares against the actual 2.8 billion shares.)

Oracle took advantage of its relatively low stock price for the period from 2010 to 2022, when the shares traded in the $50 range to repurchase a large portion of its float. The company until the past few years was viewed as a slow-growth technology company.

By contrast, Tesla’s share count has risen about 70% over the past 10 years—and has more than doubled over the past 15 years.

Oracle has experienced the largest percentage drop in its share count among many of its Big Tech peers.

Over the past 10 years, Oracle has shrunk its share count by about 36%, edging out Apple which has reduced its stock outstanding by 35%. The drop for Microsoft, Meta Platforms, and Alphabet over the past decade is each around 10%.

The Oracle situation shows that when it comes to creating shareholder wealth, it’s important to boost both the numerator—the company’s value—and reduce the denominator, the share count.

Write to Andrew Bary at andrew.bary@barrons.com