Assuming the company is not in danger of falling apart, and the company is stable or even thriving… how does share Dilution benefit the shareholders?
Or is share Dilution considered a last resort for the company to stay a float?
I am sorry, but I really don’t know how common share Dilution is to be issued and the reasons behind it.
In: Economics
There an it depends in there. Just straight dilution, like when a company creates shares to give to management does not benefit the existing shareholders.
But there are some times it is good for the existing shareholders. A company can make an acquisition by issuing new stock and giving that stock to the owners of the other company in exchange for the company. If the choice of company to acquire is good, the total value of the company can go up faster that it would and all the stock holders benefit well. It may be that the owners of the company to be acquired like this because it can be much better tax wise in the short run.
The third thing is the company is about to go under and issues shares to try to stave it off. AMC has done this. How well it works out remains to be seen, but if AMC goes bankrupt then both new and old shareholders lost their investment.
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