Comments by "" (@ThePlainBagel) on "The Cost of Share Dilution" video.

  1. Happy Friday everyone! What are your thoughts on share dilution? Are you willing to give management the benefit of the doubt, or do you stay away from rising share counts?
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  2. Companies need to provide documents justifying the issuance to auditors, who have the responsibility of picking up on blatant scams, but some slip through the cracks
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  3. ​ @francisluglio6611  Well not necessarily. Dilution happens when the COMPANY sells more shares than what's already outstanding; in other words, they create new shares and sell them to investors. If the owner IPO'd and kept 30% of the company's shares, those shares aren't new, they are just held by one investor, so the owner then trading those stocks won't cause dilution. If the company issued more shares, we would see dilution, regardless of what the owner does with his/her shares. Hope that clears things up!
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  4. It won't raise the share price because the share count goes up as well, and because shares are often issued below market price, it actually lowers the price of the stock (i.e. new shareholders get a $50 stock for $48, bringing down the per-share value of the company).
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  5. Founders will sometimes create different classes of shares that are undilutable (I.e. a class that own 50% of voting rights, or even 100%), but for common shares there’s not much stopping a company from issuing shares. The idea is that market mechanics will punish a company that issues too many shares (price will fall to adjust), but obviously investor enthusiasm prevents a proper price adjustment from time to time.
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  6. ....yes it is
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  7. Yep! So long as it’s not a direct re-upload and somewhat “transformative.” A small clip as part of a larger video is totally fine
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  8. Companies need to issue documents that are audited to justify the share issuance; the idea is that auditors would pick up on an attempt to scam investors. But a large part of it involves taking management's word at face value.
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  9.  @RandomGuyOnYoutube601  That depends on the price the shares are issued for; if the shares are issued below the current market price, than it theoretically hurts the value of your position (the investor pays less than their dues into the cash pile). It also depends on what the money is put towards; a company doesn't issue shares to bolster its cash pile, so while in the short term the cash raised doesn't cause dilution from an asset perspective, what really matters is what that money is used for. The dilution occurs when the company can't achieve a high enough return on its equity to justify the issuance (i.e. putting the money towards a project that fails). Therein lies the risk.
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  10.  @RandomGuyOnYoutube601  It's also what I said in the video... 4:29: When a company issues more shares they generally have to do so at a price that is lower than the current market price of the stock. This inherently reduces the value of your holding. 5:43: So if a company can achieve a high enough return on equity with the money they receive from a share issuance, the impact of share dilution may be offset.
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  11. I've actually gotten that comment a few times now, it's more of a habit than an intentional expression, I'll be working on it!
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  12. No haha this is my only channel, but I can hear the similarity!
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  13. Not quite, a share split has no real impact on current investors. It doubles the number of shares in circulation, but those who already own 1 share will now have 2, and each share's price is split in half. It's something companies do to make their share price lower/more affordable, but it doesn't actually mean a whole lot.
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  14. You're right I don't believe owners have to sell all their shares when they IPO!
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  15. The link doesn't work if you're already signed into an account, does it work if you open it in incognito mode?
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