Mergers, Stock Splits, & More
Companies can take actions that may affect shareholders. Such actions include:
Mergers and Acquisitions
A merger or acquisition commonly occurs when one company decides to buy another company. There are several types of mergers, but all can affect the value of both the target and acquiring companies' stocks If you own shares of either the target or the acquiring company, their name or ticker symbol may change.
Example:
Company ABC buys company XYZ. Company XYZ shares convert to ABC and XYZ stops trading.
Stock Splits
When a forward stock split occurs, the number of shares held by shareholders (known as outstanding shares) increases while the price per share typically decreases. A forward stock split proportionally affects both whole and partial shares.
Example:
You own 20.5 shares worth $10 per share. The company carries out a 2-for-1 forward stock split. As a result, you now own 41 shares worth $5 per share.
When a reverse stock split occurs, the number of shares held by shareholders (known as outstanding shares) decreases while the price per share typically increases. A reverse stock split proportionally affects both whole and partial shares.
Example:
You own 20.5 shares worth $10 per share. The company carries out a 1-for-2 reverse split. As a result, you now own 10.25 shares worth $20 per share.
Delisting
When a stock exchange delists a company, their stock stops being available to be bought or sold on that exchange. The stock may be traded on another exchange or not traded at all. If the stock is no longer supported on Cash App Investing, shareholders may only be able to exit that position by selling or transferring the share(s). Cash App Investing will provide additional information if this change occurs.
Symbol/Ticker Change
A company may change their ticker symbol for a variety of reasons, such as a name change, merger, or delisting. Cash App Investing will provide additional information if these changes occur.
Spinoff
A spinoff occurs when a part of a company separates itself to form a new company. During a spinoff, the company may take several different courses of action, such as giving current shareholders shares of the new company or cash.
Example:
Company ABC sells cars and decides to list its parts division as a separate publicly traded company named XYZ. The spinoff company is set to go public in a month and will trade under XYZ. Cash App Investing may offer the stock upon being listed in the NYSE.
If you hold fractional shares, rounding may affect your ability to be credited for stock, cash, or other compensation in connection with any corporate action, as there may be a minimum share requirement to participate.