Issuing shares has two effects:
a) In the long run, there is the obvious dilution of the existing holders. If the O/S of a company doubles, the holders from before the increase only hold half as much of the "pie" as they did before (though it might be a larger pie by virtue of the capital inflow)
b) In the short run, the sale of the shares being issued can drive the PPS down
Some people like to exaggerate the impact of the latter. 50mm shares spread over the 60 trading days per quarter is an average of under 1mm shares. That's undeniably a negative factor, but this downtrend is not about 504 issuance overwhelming demand. It is about folks becoming pessimistic regarding the duration the negative cash flow phase of development and pessimism about the future trend of the share price. It is retail selling.
Heck, if Rocketstocks sold out (as some posters this evening are alleging -- I for one doubt it), that by itself would be about half as big an impact. I myself sold nearly 10mm from 1.2 on down to 0.006.
The 504s are a convenient excuse, but I don't think that gets anywhere near the true explanation here.
Wadi
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