(Total Views: 329)
Posted On: 06/13/2019 8:33:08 AM
Post# of 82686
Quote from finance.zacks.com:
Regarding Authorized vs. Outstanding Shares
“Significance:
The number of authorized shares is useful information for company management, but has no relevance for investors. You cannot access authorized shares until they start trading. A company may apply for an increase to its authorized stock if it needs to raise additional capital either for operations or for strategic acquisitions. The outstanding share count changes when a company issues new shares or repurchases existing shares. These changes can affect the stock price and thus the value of investment portfolios. For example, if a company issues new shares to pay off long-term debts or to raise funds for building new stores, investors might bid up the stock price in expectation of higher profits. However, if the company is issuing new stock to fund an acquisition, the stock price may fall in the near term because of share dilution.”
Regarding Authorized vs. Outstanding Shares
“Significance:
The number of authorized shares is useful information for company management, but has no relevance for investors. You cannot access authorized shares until they start trading. A company may apply for an increase to its authorized stock if it needs to raise additional capital either for operations or for strategic acquisitions. The outstanding share count changes when a company issues new shares or repurchases existing shares. These changes can affect the stock price and thus the value of investment portfolios. For example, if a company issues new shares to pay off long-term debts or to raise funds for building new stores, investors might bid up the stock price in expectation of higher profits. However, if the company is issuing new stock to fund an acquisition, the stock price may fall in the near term because of share dilution.”
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