The Lovisa Holdings Ltd (ASX: LOV) share price is having a tough time on Tuesday.
At the time of writing, the fashion jewellery retailer’s shares are down 3.5% to $30.58.
Why is the Lovisa share price under pressure?
The good news for shareholders is that today’s decline has nothing to do with a bad update or a broker downgrade. In fact, today’s decline could be seen as a positive for them.
That’s because the Lovisa share price weakness has been driven by its shares going ex-dividend today for its upcoming interim dividend.
When a share goes ex-dividend, it means the rights to the dividend payment are locked in. So, if you were buying shares today, you would not receive the dividend on pay day. Instead, the dividend would go to the seller of the shares.
In light of this, a share price will generally fall in line with the value of the dividend to reflect this. After all, you don’t want to pay for something you won’t receive.
If you are an eligible Lovisa shareholders, you can now sit back and wait for pay day next month. The company will be paying shareholders a 50 cents per share partially franked dividend on 18 April.
Should you buy shares?
The team at Morgan Stanley may see the weakness in the Lovisa share price today as a buying opportunity.
Last month, the broker put an overweight rating and $32.50 price target on its shares.
However, as this implies only modest potential upside of 6.3% for investors over the next 12 months, it may be better waiting to see if a more compelling entry point emerges in the near future.
The post Why is the Lovisa share price sinking today? appeared first on The Motley Fool Australia.
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More reading
- 34 ASX 200 shares with ex-dividend dates next week
- How ASX shares vs. property performed in February
- These were the best performing ASX 200 shares in February
- Should you buy Lovisa shares before they go ex-dividend?
- I’d use the Warren Buffett method and buy this ASX stock
Motley Fool contributor James Mickleboro has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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