Posted by "Strukture" on The ICTY board.
$ICTY - Dilution, no dilution, does it even matter? Dilution scare tactics don't work.. or shouldn't, here is why I think it's important that we understand Dilution
Dilution is uttered A LOT on the boards so before you get scared by these tactics, I encourage you to read on...
Dilution does not take place when MMs move stock selling at bid into or buying at ask out of the market. Those shares
are part of the OS and free trading. They are not new to the OS, they are new to the days trading..
Flooding the opposite side of the bid/ask direction, does stall price movement in either direction. It is one of many tricks MMs use to control direction. But it is NOT dilution.
Dilution is when the company moves treasury shares from the Authorized Shares to the Outstanding Shares or tradable inventory, for cash investments in the company. This means there are more shares at the same market price and reduces the size of the EPS. It doesn't reduce the price or value of the stock. But so many penny stock traders actually believe that it does.
Dilution DOES NOT change price, it changes EPS. Creating loss in company value, not stock value.
SO that being said...Dilution does not occur when MMs trade opposite the trend price movement. That would be defined as manipulation, it has nothing to do with dilution.
Understanding Dilution and the OTC, Penny stock traders cannot compare it equally to the BIG BOARD stocks. SOOO few OTC companies even have an EPS to effect
so dilution can't effect their company value in the first place HA HA
. Whats the value of no earnings,.. do the math you got it
thus no EPS.
HOWEVER!!!!!the value of more cash to a startup is huge! It gives them the ability to attempt to grow. Without the cash it can't. SOO REALISTICALLY we should be happy about dilution, because WE ALL WANT THE COMPANY TO GROW!!.
That being said I generally hate hearing diltution is bad. In Penny stocks, dilution is the best news one can hear. Not only does it give the company a chance at growth. It doesn't effect their EPS value one bit, because THEY DO NOT HAVE AN EPS to effect.
So dilution is a win company, win educated OTC trader, The only negative is not knowing whether the company is diluting for the right reasons over the longer term WHICH NO ONE WILL EVER KNOW UNTIL IT IS TOO LATE!!
Dilution has to do with raising cash for growth this normally causes smaller Earning Per Share (which again wont effect 99.9% of OTC stocks) So it is only perceived (NOT actual) loss in company value. Because the cash recieved for the shares goes into the company books as cash assets, until used and shifted around in the accounting process. One never knows if the dilution is really bad or good, until management uses it and succeeds in company growth or not.[color=red][/color]
SOOOOOOO canwe move from the Dilution dribble now..
Thank you ,