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Wednesday, June 29, 2022 4:29:01 PM
What Is Stock Dilution?
"Dilution does not necessarily mean the dollar amount of the investment changes, but since the shares held are a smaller percentage of the total company, the investor has less pull in the company's decisions and their stake represents a decreased percentage of the company's overall earnings. Although news of a secondary offering is typically not welcomed by shareholders because of dilution, an offering can inject the company with the capital necessary to restructure, pay down debt, or invest in research and development. In the end, acquiring capital through a secondary offering can be a longer-term positive for the investor, if the company becomes more profitable and the stock price rises."
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