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Issuing stock still costs existing shareholders money in terms of diluted ownership stake
by dghlsakjg 3y ago
Issuing stock still costs existing shareholders money in terms of diluted ownership stake
- zamalek 3y agoFurther, if the stock is stagnant or declining, this would be taking money from investors via stock dilution. If Jim puts $10 into the company for 10 of 100 total shares, and you increase the shares to 200 by handing out money to executives - Jim now owns $5 (10 of 200 shares) with his other $5 being used to "print" the shares. This is not currently the case with Tesla, but the stock has a reputation for being volatile.
- dghlsakjg 3y agoIt’s taking money from investors no matter what the price does. If the price is going up the existing investors now own a smaller percentage of a more valuable company. It’s just more obvious if you get diluted while the company doesn’t change value.