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You continue to make a 1:1 assumption. Dilution can cause the stock to go down because of FUD of financial health. It can go up because of strong leadership and
by blackearl 6y ago
You continue to make a 1:1 assumption. Dilution can cause the stock to go down because of FUD of financial health. It can go up because of strong leadership and optimistic futures. It's not occurring in a vacuum where $1 is 1 share and +$1 to company worth.
- Spivak 6y agoYes but a company doing something that causes the market to value shares less isn’t dilution. The fact that you know how the market will respond to companies raising capital by issuing new shares doesn’t change the legality of it.
- ALittleLight 6y agoBut raising money might also cause the stock to go up, right? More investment signals confidence and planned growth. More people may want to buy in. Issuing new shares is not always a good move and sometimes it might cause investors to lose money and percentage ownership, but sometimes it might be a good move and result in investors gaining money (though still getting their ownership diluted).