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
Stock dilution is when a company issues more shares. Example. If you own 10% of a company with 100,000 shares outstanding and the company issues 100,000 more shares to raise money you’re original 10% owner ship is now only worth 5%. Companies diluting share holders sucks. You still have the same amount of shares and same dollar amount, they’re just worth less of your total ownership in the company.
Edit: further clarification
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