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Verticalmojo

08/22/13 8:31 AM

#61817 RE: Hulk Hogan is God #61809

The assets of the company got larger. Whether people are willing to buy a lot more shares is going to depend on management to do something useful with the money such as issuing new shares to achieve CE mark. If it's issuing shares in order to buy something useless, the market might not pay for new shares.

A possible explanation is simple supply and demand. Before the company offers new shares, the price of the stock is set by the balance of "buyer demand" and "seller supply". When the company offers new shares for sale, it is increasing the amount of "seller supply" while nothing has happened to the "buyer demand". With more supply and the same demand, the price goes down. Please note: the only "thing" that increased was the number of people trying to sell shares or, more accurately, the number of shares available for sale. Hopefully, once the extra shares are all sold, you would get a price bump up because now the "seller supply" has dried up (and presumably gone back to its original level).