Replies to post #36486 on Baristas Coffee Company, Inc. (BCCI)

[BobSinCA]

You and Rookie miss my point about dilution:

- Market value (MV) of a company = present value of discounted cash flows, adjusted for risk.

- Price per share = MV / shares outstanding.

- So, more shares outstanding equal lower pps, absent any other factors affecting MV. Have to agree with that, folks, it is pure arithmetic not rocket science.

Your point, is that pps could be driven below MV at least temporarily by shareholders selling all at once, but that BCCI shareholders don't have to worry about insiders doing that due to SEC restrictions.

I agree with THAT point -- but it doesn't disprove my point that dilution, no matter the source, is harmful to pps. Arguably, the pps action which occurred the week the employment agreements were apparently signed (they are dated 1 March, but we don't know when they were signed), supports my point.

Suppose instead of 120M shares versus current 400M shares, it had been 1M shares -- would you still say not to worry about dilution since insiders can't sell for some amount of time into the future? I would agree that 1M shares of dilution is worse than 120M shares, but that doesn't mean 120M shares of dilution has no impact on pps.