So, if the company does a RS, the CEO will be stealing from himself? The CEO has more than 600 million shares and will likely be adding to that number quickly. Are you saying that, if he decides to do a RS, he is stealing from himself and showing disloyalty to himself. How is the CEO stealing from you if he does a RS? I will wait for an answer. And when you provide readers with the answer, be prepared to explain how he would be stealing from you and not himself.
Companies go public by issuing shares to raise money. There is no rule or law that states that such companies may issue shares only once. Also, if you invested on the day the company goes public, you have no more special rights than someone who invests 10 years later. As an investor, it is your responsibility to know these things. If you invest in a company with very little revenue, no income, and is trading for pennies, then you should not have invested in the company, because you clearly are unaware of the risks. And this shows your lack of dd when they tell you every quarter that they will need to issue more shares to stay in business. If the company goes under, it would be your fault for investing because you failed to educate yourself on the workings of the company, despite their giving quarterly updates.
If they end up having billions of shares outstanding and are still trading for pennies, the smart business decision for all shareholders is to do a RS when they start generating meaningful revenues or profits. The drivers of share price, from which shareholders will benefit, are institutional investors, who do not purchase shares in companies that are not on a major stock exchange. They will also generally not purchase shares of a company trading under $5. Getting the share price to a point where they will satisfy these two requirements for shareholder return will more than likely require a RS. It might not be necessary, but getting to $5 per share from 1 cent with 2 billion outstanding shares will be extremely difficult. If all shareholders hold and buy more, there's a slight chance; however, every shareholder has a point where they will want to sell. An investor who bought 2 million shares at 1 cent for a $20,000 investment, may have a target sell price of $0.50 for a $980,000 profit. Trust me, there are many shareholders who will sell way before it gets to $5 per share. And this is one of the reasons why it will be extremely difficult to get to that price without a RS.
Also, some shareholders will look at the opportunity cost of holding this stock instead of selling and investing in another company where the stock price is moving. So, if you want to see a return on your investment, you need to expect a RS to happen at some point.
You said that the company should get a loan. Do you think that any company can get a loan when they want? Well, they can't. And guess what happens to the value of your shares when they get a loan? It drops. The equity of your shares drop with each increase in dollar of debt. And guess what else? If the company eventually has to go out of business, guess who gets rewarded first with any leftover assets? The lenders will be rewarded first. You will likely get nothing.
Listen, I am not trying to get anyone to sell. If you want to see a return on your investment from this company, your best bet is to hold, maybe buy more, and then hope for a RS if the stock cannot get to $5 per share without the RS. And again, with this many shares outstanding, the current share price, and the behavior of investors, it will be a very tall task to achieve.
Now, if you read this and think that what I am trying to do is scare you into selling then, with all due respect, you simply do not understand English.
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