What was so surprising was the market's reaction to ESIO's announcement. Shares rose more than 10% at the opening and finished the day up about 6.5% on more than four times the average volume. This was all because the company is forking over some cash to shareholders. Although I'm happy whenever a stock I own jumps 6.5% in one day, the reaction makes no sense. Perhaps current shareholders are happy to have some cash returned to them, but why would this announcement, by itself, attract any new buyers? ESIO data by YCharts
When a company pays a dividend, it is transferring capital back to shareholders, capital the company will no longer have access to. In the case of the one-off special dividend, some people interpret these payments as a signal that the company has no better opportunities for using that cash and generating a reasonable return on capital. As much as shareholders love cash in their pockets, they also want to know that the companies they own can find opportunities to grow their businesses.