leoncio1, with your thoughts...
First, don't worry about your bad English. Heck, mine is far worse. Heck, I break more verbs than anyone on IHub.
Now with TPHM, your thoughts are conservative and are sound. The merger will probably come at the expense of us shareholders, but I see it as us shareholders getting something for something.
I am sure that the merger can't happen for free. It has to be an expense and at the expense of someone. This is with all mergers in which all investors should understand this before buying any stock that's merging/acquiring.
Dilution usually has to happen in order for a company to grow, but it’s the balance of dilution that needs to be known to determine if such is a good deal or not. Bottom line, if the merging company is profitable, then generally it could be considered a good deal.
You have what I call ”good dilution” and ”bad dilution” that exists within the market, especially within the penny stock market. I think all investors buying any stock within the market, especially any penny stock, should ”expect” some kind of dilution if you are expecting for the company to grow. The main reason why any stock exists as a stock is to position itself for growth by using their shares as leverage to grow their company to a point to where it is not required to use shares anymore until the company obtains profitability. This is when the company is growing because of generating Income (Revenues exceeding Expenses). This is when a company is profitable. Until that happens, dilution should be expected for any stock any of us buy. It simply needs to be controlled to where it is not ”bad dilution.”
When you are using shares to legitimately grow your company to the next levels, then that is “good dilution.” Good dilution is fine although it’s the ”bad dilution” that is the leading cause as to why most stocks, especially penny stocks, fail or never do what investors truly believe they will do. This ”bad dilution” is when dilution exists for illegal or unethical reasons outside of growing the company.
The valuation from the merger should balance out any kind of unknown dilution that could be initially viewed as bad that some might be expecting. Although the verdict is still out on TPHM, it does look very good for TPHM if they actually close the merger.
I use to have a hard time accepting dilution in any stock I was in, but then I had to finally come to grips with myself to accept dilution as a norm for any stock that I am in. Most investors have a hard time realizing this, but will have no choice except to accept it… like it… or not. Dilution is 99% of the time necessary for growth.
v/r
Sterling
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