On any day, you can look up a stock’s closing price and get one number. Clear as clear can be, right?
Not so fast. Closing price can be one number, but it can be affected behind the scenes by corporate stuff like rights offerings, dividends, stock splits, and other corporate actions. The closing price, if it's affected by this stuff, gets adjusted to reflect said actions.
A famous example is the one-time enormous dividend made by MSFT (Microsoft) when Bill Gates retired from the CEO role. That little action required some adjusting. Without it, the closing price of MSFT would have looked less spectacular than it really was.
BTW, adjusted closing price is important when looking at historic closing prices or when doing analysis on historic returns. If you're just an average investor, though, you probably won't even run into it.
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Finance: What is a Rights Offering?6 Views
finance a la shmoop what is a rights offering all right people think a right
to buy and buy at a discount kind of companies may be fearful of a hostile [Woman pointing at woman behind reception desk]
takeover or some other big bad event that harms them and they want to give
existing shareholders preferential treatment over external non shareholders [Shareholders at a night club]
this rights offering is essentially a hostile takeover defense so they might [Bear attacking rights offering]
say ok pals for the next 60 days you have the right to buy an additional
share of our stock which is currently trading for 312 dollars each for $200 a [Man discussing company stock at presentation]
share and note the discount wink wink and you need to currently own 5 shares
for every one that you'll then buy sound like a plan well that is the company is [Man throws rights offering to woman]
offering those rights to buy at a discount and the shareholders can sell
those rights to other non shareholders for cash in essence is kind of a funky
one-time dividend that actually hurts both the would be external hostile [Metal anvil land on a bear]
takeover people but unfortunately also hurts the employees who have stock
options not actual shares so then they suffer the dilution of this rights [Anvil lands on employees]
offering with nothing to show for it yeah and you may ask is there such a
thing as a hostile take under mmm wondering about that [People protesting outside metal fence]
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