Suppose company ABC has 100,000 shares at $10 each, and I have 10% of those shares, so own 10% of the company. I understand that a stock split would create 200,000 shares at $5 each, but the value of my holding – both in dollar value and percentage – doesn’t change.
How does stock dilution happen then, where I own a smaller percentage of the company without my selling any assets (obviously, the dollar value of my holdings would change based on the market)?
In: 5
splits don’t dilute you bc you get the percentage equivalent of total shares bc your holdings split as well. when the company issues new shares and sells them on the open market (or uses them for acquisition) would be when it’s a dilution even. your % ownership in the company has decreased assuming you didn’t get any of the newly created shares.
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