What it is:
An impact day is the day on which a company's secondary offering begins trading.
How it works (Example):
Let's say Company XYZ is a public company and would like to sell additional in order to raise to build a new factory. This of additional shares is called a . Company XYZ would hire an investment bank to underwrite the , 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 it Matters:
Impact days signal when the number of outstanding shares increases. Accordingly, impact days also signal a decrease in a company's per share and thus the share price might decline.