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If a company issued twice as much stock, would it have a market cap that's twice as high as it's 1x issuance? If Amazon offers 100 AWS-Bux for every euro/yen/d
by DINKDINK 7y ago
If a company issued twice as much stock, would it have a market cap that's twice as high as it's 1x issuance? If Amazon offers 100 AWS-Bux for every euro/yen/dollar would they bring in 10x as much revenue if they offered 1000 AWS-Bux for every euro/yen/dollar[1]? No, to suggest otherwise would be economic delusion; economic literacy doesn't seem to be the ETH's community's forte.
The quantity is irrelevant, the exchange rate that reaches equilibrium is what is relevant
[1] There are marginal second order effects with human psychology (people feeling like they got more of something)/ brokerage arrangements (1 share being the smallest divisible portion of ownership that a SE will clear causing share subdivisions needed to be cleared by a broker)
- zaarn 7y agoCompanies issue more stock all the time and it definitely has some impact on the market as it devalues a single share. If a company simply turned each share into two shares, then the market cap would be the same but the fractions of the markteshare that can be traded are smaller. If the company suddenly issued the entire stock on the market again, the price would plummet to half.