KEYPOINTS:
🔑 Likely due to high amount of *stocks repurchase (causing a negative *retained earnings).
🔑 Investors can take this as a good sign that the management is very long in the company's stock.
Disclaimer: This communication is provided for information purposes only and is not intended as a recommendation or a solicitation to buy, sell or hold any investment product. Readers are solely responsible for their own investment decisions.
Author's note on 29Feb24: Read this article for the more updated version.
Fortinet's Shareholders' Equity turned negative in Q2 2022.
Fortinet's 2022 Q2 result revealed their Total Equity amount has reached a negative level
for the first time since 14 years.
Read here to learn why negative shareholders' equity could be a redflag for investors,
What caused Fortinet's negative Total Equity value?
When taken a closer look at what caused the negative equity amount,
it is due to the *Accumulated Deficit (aka negative *Retained Earnings amount)
What caused Fortinet's negative Retained Earnings amount?
When looking deeper into what caused the negative *Retained Earnings amount
it revealed that this is due to their high amount incurred from *Repurchase & retirement of common stock ($1,451.6 mill).
Why were Fortinet's Retained Earnings negative in the past 4 out of 5 years?
Looking back at Fortinet's Retained earnings in the past few years,
we can see that it was negative in 4 out of the past 5 years
