Скачать или смотреть Why Issuing New Shares is Bad for You as an Investor

Unlike a stock split, issuing new shares affects you negatively as an investor. Let's get a taste of why. Add me on Instagram/Twitter: @MrArturNagy

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WHAT IS THE PROBLEM WITH ISSUING NEW SHARES AND WHY DILUTION IS BAD FOR YOU?
1. The number of outstanding shares for a company can change for various reason. One is when company employees and holders exercise their stock options (so gaining shares of the company) introducing new shares to the circulation. Another more common and impactful way is when a company issues new shares to raise capital. In this case new shares are created and most often bought by other investors (institutions and private investors) other than you.
2. When new shares are issued without you buying more, your position in the company as a holder will be smaller as you still own your X amount of shares but the total number of shares just increased, meaning you represent a smaller ownership of the company. You have been diluted as an owner.
3. If the number of shares double, but earnings/dividends stay the same, the company now has to distribute it between two times as many owners, so each share will get only half of what it used to get, reducing their value on the market, causing share prices to fall.

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*The content in this video is accurate as of the posting date. This is not investment advice. I am not a financial advisor.