DEFINITION of 'Impact Day'

Impact day has been used to describe the date a company announces a dilutive secondary offering, or add-on, of new shares to the public, which may cause the share price to fall.

BREAKING DOWN 'Impact Day'

Because impact days increase the total number of outstanding shares, it leads to dilution, reducing existing shareholders’ share of the company, and earnings per share – which has an impact on the stock’s price.

Secondary offerings are used to raise additional capital, whether to expand the business or increase working capital. As with an initial public offering, an underwriter will assist the company in determining the number of shares to offer, establishing a share price and selecting the right date for impact day.

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RELATED FAQS
  1. Why do we need a secondary market?

    Find out why secondary markets play a crucial role in economic activity by promoting efficiency, safety, information and ... Read Answer >>
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    When a company increases the number of shares issued through a secondary offering, it generally has a negative effect on ... Read Answer >>
  3. What's the difference between primary and secondary capital markets?

    In the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investors ... Read Answer >>
  4. After an initial public offering, does a company profit from increases in its share ...

    The short answer is "no". To understand why, recall that the stock market is actually comprised of two markets - a primary ... Read Answer >>
  5. Why would I need to know how many outstanding shares the shareholders have?

    Find out why shareholders should know how many outstanding shares have been issued by a corporation, and learn what happens ... Read Answer >>
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