Will the dilution of shares, during COVID-19 period, cause the current stock price to drop?
Will the dilution of shares, during COVID-19 period, cause the current stock price to drop?
Furthermore, after the dilution of shares and COVID-19, will the company be able to hit the 'peak'/'normalized' stock price once the economy has recovered back to normal?
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Do not look at individual stock prices. A better way to look at value is market capitalization. This is listed in most financial stock quotes online.
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There are a few reasons why companies issue more shares:
- from warrants (could be a form of compen...
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Dilution of shares is the outcome, not the cause. The impairment of balance sheets compelled mgmt to seek injection of fresh capital, while incumbent shareholder bear the dilution effect. This is the risk shareholder had to undertake when investing.
The lack of earnings, the lack of stockbuybacks + investors fear amplified amid a global lockdown & uncertainty towards normalcy are the reason(s) behind global equity meltdown