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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated September 30, 2020

What is an Impact Day?

An impact day is the day on which a company's secondary offering begins trading.

How Does an Impact Day Work?

Let's say Company XYZ is a public company and would like to sell additional shares in order to raise money to build a new factory. This sale of additional shares is called a secondary offering. Company XYZ would hire an investment bank to underwrite the offering, register it with the SEC, and handle the sale. The company receives the proceeds from the sale of the shares.

Company XYZ is not the only entity that can effect a secondary offering, however. Let's say you own a very large block of Company XYZ shares -- maybe 100,000 shares. In this type of secondary offering, the seller -- which is not Company XYZ in this case -- receives the proceeds.

Why Does an Impact Day Matter?

Impact days signal when the number of outstanding shares increases. Accordingly, impact days also signal a decrease in a company's earnings per share and thus the share price might decline.
 

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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Impact Day, then please ask Paul.

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