Questions tagged [dilution]
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Why is stock dilution legal?
What I always heard, since I was a child, was that if you own a stock share, you actually own a small share of a company. That seems to be the general consensus of what a stock share is.
Well, that said, let's assume I have 10 out of 100 shares of a…
lvella
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What stops management from just "compensating" themselves by taking all the stock in a company?
One of the odd things about a lot of modern companies is that the management, meaning the senior officers (CEO, CFO, CTO, etc) can pay themselves in stock.
For example, Square's Jack Dorsey pays himself 500,000 shares of stock or something like that…
Five Bagger
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Is it possible for a company to dilute my shares to the point they are insignificant
Say I have invested in a company that has 4 outstanding shares. 3 shares are owned by the founder and 1 by me. Let’s say the valuation of the company is $100.
If the founder wants to increase her ownership share of the company by acting in bad…
str31
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Greedy shareholder that does not want to dilute his portion
What needs to be done or could be done if a company wants to raise capital and one of the shareholders doesn't want to dilute his shares and brands all the others as "too greedy".
The shareholders agreement contains an article of no dilution and…
M.J.P
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Will a company's stock price be affected when warrants are issued, or exercised?
A company has 500 million outstanding shares, and it issued 100 million warrants 10 years ago.
Assume that none of the warrants has been exercised yet. If tomorrow all the holders exercised their warrants, the company will have 600 million shares…
Nathan
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What's to prevent majority shareholders in a company from dilluting a convertible note?
A company issues a convertible bond to an investor. It has a par value of $10,000 and can be converted into 5 shares.
The company currently has 50 outstanding shares, so the bond corresponds to ~9% (5/55) equity, should it be converted right away.…
Soggiorno
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How much is a founder allowed to dilute stock?
I am 9 days away from completing a contract for a new start up that still has yet to raise money. At the beginning I negotiated 1% of the company, and a month into the contract he incorporated the company and we amended my contract to be 1% of the…
jdbriner07
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Why isn't newly raised cash priced-in after a secondary stock issuance?
I'm an owner in $HUT8. Yesterday after market close they announced a secondary offering of 15% of the shares.
I understand this is dilutive for the shareholders, and today it seemingly led to a drop in stock price of around 15%.
But I was thinking…
Ansjovis86
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Can Directors issue themselves shares during raise?
I was wondering if it is legal for company directors that also work and operate the business to gift themselves shares during a capital raise in order to retain their controlling interest in the company? The rationalisation being that they aren't…
Matthew
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Companies that list on an additional Stock Exchange
I am not sure if this question has been asked before. I have just started purchasing stock and have the following question:
I have interest in purchasing shares of a company that has been doing very well in a sector I am quite familiar with.(mining…
Dale Stuebing
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How does dilution work?
Round 0
Owner 1: 500k shares (50%)
Owner 2: 500k shares (50%)
Round 1 (Company raises a $5 million Series A round at $20m post-money)
Owner 1: 500k shares (37.5%)
Owner 2: 500k shares (37.5%)
Investor 1: 333,333 shares (25%)
Round 2 (Company…
Jeremy Wong
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What is intrinsic value of stocks with diluted voting power?
Recent technological companies went to IPO with publicly traded stocks that have 1/10th of voting power of the privately held stocks.
Facebook, Google, GoPro are examples of such companies.
Usually there is class A shares with 1/10th of voting…
Boris Suvorov
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Facebook buying WhatsApp for 19 Billion. How are existing shareholders affected?
A bit late in the game. But was curious on how this deal works out.
Facebook bought WhatsApp for $19 billion. This involved $4 billion in cash, $12 billion in stock and $3 billion in restricted stock.
The general question is: how does $15 billion…
Zenil
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How and when are stock shares created? Destroyed?
Apologies if this is a duplicate, but someone (quite possibly me) is confused about whether stock shares can be arbitrary manufactured at any time and in any quantity, or whether they in fact represent partial ownership of the company and can be…
keshlam
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Does the SEC (or any governing body) limit Rights Offerings?
Could AAPL offer all shareholders a non-transferable right to purchase two shares at a 20% discount (from today's price, exercisable for one month) for each share they own?
This announcement will (almost certainly) cause the AAPL share price to…
bobuhito
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