What Is a Treasury Stock?

By Rachel Warren – Updated Apr 4, 2025 at 10:42 PM

Key Points

Treasury stock reduces outstanding shares and does not offer voting or dividend rights.
Companies can use treasury stock for employee plans or to boost stock price metrics.
Investors should evaluate financial health before investing in firms doing buybacks.

Treasury stock is a company's own stock that it has repurchased, meaning it's no longer held by external shareholders but is held by the company itself. Companies may repurchase their own stock for various reasons, including reducing outstanding shares, increasing earnings per share, or using the shares for employee compensation programs. Here’s what investors need to know about treasury stock.

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An image of a share certificate. — Image source: Getty Images.

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Common stock is recorded in the shareholders' equity section of the balance sheet. It represents outstanding shares, meaning shares that are in the hands of investors. On the other hand, treasury stock is stock that a company has repurchased from the open market or from shareholders.

The company that repurchases its own shares does not have ownership rights or voting power for those shares. Treasury stock does not receive dividends and it reduces shareholders' equity.

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About the Author

Rachel Warren is a contributing Motley Fool stock market analyst covering pharmaceuticals, biotechnology, medical devices, information technology, and consumer goods. Prior to The Motley Fool, Rachel was a paralegal and legal administrator. She holds a bachelor’s degree in paralegal studies from Liberty University School of Law.

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Rachel Warren has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.