What happened Shares of Vipshop Holdings (NYSE: VIPS) have skyrocketed today, up by 13% as of 11:10 a.m. EDT, after the company announced a share repurchase program. Vipshop's board of directors has authorized a $500 million buyback program, which it can conduct over the next two years. So what The Chinese e-commerce technology company plans to repurchase Class A shares at its discretion using a combination of open market purchases, privately negotiated transactions, block trades, and potentially other methods. One Class A share of Vipshop is equal to five American depositary shares (ADS). Image source: Getty Images. Vipshop's board will review the program on a periodic basis and may adjust the program's terms, such as its timing or size. Vipshop will fund the buybacks with existing cash on hand. Now what Investors tend to like buyback programs for a number of reasons. For starters, repurchase authorizations can sometimes be interpreted as a bullish signal that management believes the stock is undervalued. Additionally, buybacks can also potentially be accretive to earnings to the extent that the repurchases may reduce the total number of shares outstanding, or offset dilution related to stock-based compensation. A $500 million program may be accretive when compared to Vipshop's current market cap of $21.8 billion. Vipshop finished 2020 with approximately $2 billion in cash on its balance sheet and the company generated $1.1 billion in operating cash flow in the fourth quarter. Between cash on hand and ongoing cash generation, the company will be able to easily fund the buybacks. 10 stocks we like better than Vipshop HoldingsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Vipshop Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source