Both paragraphs are from Investopedia (yes, diluti
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Posted On: 08/02/2019 10:47:05 AM
Both paragraphs are from Investopedia (yes, dilution can be bad or good...we all know the bad reasons but here is the good)...
Many existing shareholders don't view dilution in a very good light. After all, by adding more shareholders into the pool, their ownership of the company is being cut down. That may lead shareholders to believe their value in the company is decreasing. In certain cases, investors with a large chunk of stock can often take advantage of shareholders that own a smaller portion of the company.
But it isn't always that bad. If the company is issuing new stock as a means to boost revenue, then it may be positive. It may also be doing so to raise money for a new venture, whether that's investing in a new product, a strategic partnership, or buying out a competitor.
Many existing shareholders don't view dilution in a very good light. After all, by adding more shareholders into the pool, their ownership of the company is being cut down. That may lead shareholders to believe their value in the company is decreasing. In certain cases, investors with a large chunk of stock can often take advantage of shareholders that own a smaller portion of the company.
But it isn't always that bad. If the company is issuing new stock as a means to boost revenue, then it may be positive. It may also be doing so to raise money for a new venture, whether that's investing in a new product, a strategic partnership, or buying out a competitor.
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