Define: XR

Ex-rights, abbreviated as XR, refers to a situation where a stock or security loses the entitlement to specific benefits or privileges that were previously accessible to its shareholders. This can occur when a company alters its ownership structure or issues new shares.

The term XR stands for “ex-rights,” which is a stock trading term that denotes the price of a stock without the value of its rights. When a company issues new shares, it may provide existing shareholders with the opportunity to purchase additional shares at a reduced price. The ex-rights date is the first day that a stock trades without the value of those rights.

For instance, if a company’s stock is trading at $50 per share and it announces a new share offering with a discounted price of $40 per share for existing shareholders, the ex-rights date would be the day following the announcement. On that day, the stock price would adjust to reflect the fact that it no longer included the value of the discounted shares. Therefore, if the discounted shares are valued at $5 each, the stock price would decrease to $45 per share on the ex-rights date.

This example demonstrates how the XR abbreviation is used to indicate the ex-rights date and the effect it has on a stock’s price. It illustrates how the value of a stock can fluctuate when a company issues new shares and offers existing shareholders the right to purchase them at a reduced price.

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This glossary post was last updated: 25th April 2024.