spud date, page-39

G'day Bukka

Market Cap = numbers of shares on issue, multiplied by the share price.

With the example you put forward, upon the one performance share becoming a tradable entity, the market cap would automatically rise from $100 to $150... The two shares on issue with an SP of $50, immediately become three shares with an SP of $50, thus the market cap must initially rise.

In a more realistic shares on issue example, shares may well get sold down a touch and the SP may indeed drop slightly. But the key here is the SP can't/won't change until one of the three shares are traded for a lower or higher price than the current SP of $50.

Hope that makes sense.