How does a company start with say 100 shares and value gets “crammed” down with more investment? If one party has five of those shares, won’t they always have the five shares and new investors get shares from some of the other 95? Are there shares that cannot get diluted? Golden shares or?
In: Economics
You and your friends agree to go to a birthday party and will get 1/8th of the cake each. The parents reserved half the cake for themselves later to keep in the fridge and eat throughout the week.
Suddenly more people show up (issuing more stocks) and so the parents decide to give up some of their reserved cake to the new arrivals.
This causes more “supply” and suddenly your 1/8th share of the cake seems less special with more people getting cake. Where you could’ve traded it for two cool car toys you might only get one car toy and a sticker now since it’s less rare. You just know Jimmy will get a slice himself and offload it to the first cool sticker he sees.
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