Knowledge Base

Corporate actions don’t just affect your share count, most of them have a direct and predictable effect on the stock price as well.

Bonus Issue The stock price drops proportionally on the ex-date. If a company announces a 1:1 bonus, the price adjusts to roughly half. Your total holding value stays the same just more shares, lower price per share.

Stock Split Works the same way as a bonus issue in terms of price impact. A 2:1 split halves the price and doubles your share count. No change in overall value on the day of adjustment.

Dividend On the ex-dividend date, the stock price typically drops by approximately the dividend amount per share. This is a standard market adjustment and you receive the dividend in cash, and the price reflects that outflow from the company.

Rights Issue Announcing a rights issue can put mild downward pressure on the stock price, since new shares are being issued at a discount. The extent depends on the size of the issue and how the market views the purpose behind it.

Buyback Generally seen as a positive signal. Reducing the number of shares in circulation can support or push up the stock price, especially if the market believes the company is undervalued.

Merger or Acquisition Price impact here varies significantly. The target company’s stock often rises toward the offer price. The acquiring company’s stock may rise or fall depending on how the market views the deal terms and the premium being paid.