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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
When a company separates a division into a new independent company, giving shares to existing shareholders.
Why It Matters
Spinoffs create value by letting each business focus and be valued independently. If you own the parent company, you automatically get shares in the spinoff - it's like a special dividend of stock. Research shows spinoffs often outperform the market because they're overlooked and forced selling creates bargains. PayPal spun off from eBay in 2015 and massively outperformed.
Key Points
- You receive spinoff shares automatically (no action needed)
- Your cost basis gets split between parent and spinoff
- Spinoffs often outperform - institutional investors may be forced to sell
Related Terms
Common Questions
When a company separates a division into a new independent company, giving shares to existing shareholders. Spinoffs create value by letting each business focus and be valued independently. If you own the parent company, you automatically get shares in the spinoff - it's like a special dividend of stock.
Spinoffs create value by letting each business focus and be valued independently. If you own the parent company, you automatically get shares in the spinoff - it's like a special dividend of stock. Research shows spinoffs often outperform the market because they're overlooked and forced selling creates bargains. PayPal spun off from eBay in 2015 and massively outperformed.
You receive spinoff shares automatically (no action needed)
Your cost basis gets split between parent and spinoff
Spinoffs often outperform - institutional investors may be forced to sell