ATLASADR (American depositary receipt)
Investing glossary · Markets and instruments
A certificate traded on a US exchange, in dollars, that represents shares of a foreign company.
Definition
An American depositary receipt (ADR) is a certificate issued by a US bank that represents shares of a company based abroad. The ADR trades on a US exchange in US dollars, so US investors can own foreign companies without opening an account in the other country.
An ADR can represent one share, a fraction or several shares of the foreign company, and its price follows the local share adjusted for the ratio and the exchange rate. That means an ADR holder carries currency risk as well as company risk, and may face local withholding taxes and fees on dividends.
Worked example
Taiwan Semiconductor Manufacturing (TSM) is the ADR of a Taiwanese chip maker. It trades on the NYSE at $436.87 per ADR in dollars, and its market value is $2.1T. Its price moves with the company's Taiwan-listed shares and with the dollar-Taiwan dollar exchange rate.
The same business can also be bought in its home market; the ADR is the convenient route for a dollar-based investor.
How ATLAS uses it
ATLAS treats ADRs as US-listed stocks, with price, fair value and probabilities in dollars, and also covers the home-market listings of many foreign companies.
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The example above uses these companies. Open their pages for the full numbers:
Frequently asked questions
Does buying an ADR remove currency risk?
No. Although it is priced in dollars, its value still follows the foreign share and the exchange rate.
Is an ADR the same as owning the foreign share?
Economically it is claim on the same company, but it is a separate security with its own fees, tax treatment and liquidity.
Related terms
Put the idea to work on your own stocks
Open any company in ATLAS to see its fair value, its odds of rising and its risk numbers side by side.
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