Share offerings

[wxytrader]

Companies should not be allowed to do share offerings without compensating the dilution to existing shareholders. I believe restricted shares get pro-rated or something whatever happened in the "The social network" where his partners shares were left unprotected after the the IPO or some offering, and were diluted to nothing...thus the lawsuit.

So prior to any share offering they should have to file the order upon which price will halt and existing shareholders have the opportunity to sell their shares back to the company or hold through the offering. Or you could get an option to sell over the next year @ the current price...they could even incentivize it so the longer you hold your shares the higher price you get.

I mean it doesn't make sense. Shareholders hold a part of the company. If that company profits off selling shares then the shareholders should profit from that profit.

 

[Maverick2608]

Initial Situation:

• Company Value: $1,000,000
• Number of Shares: 10,000
• Share Price: $100

Existing Shareholder:

• Shares Owned: 1,000
• Ownership Percentage: 10%
• Value of Holdings: $100,000

New Share Offering:

• New Shares Issued: 5,000
• Price of New Shares: $100
• Capital Raised: $500,000

Existing Shareholder:

• Shares Owned: 1,000
• Ownership Percentage: 6.67% (1,000 / 15,000)
• Value of Holdings: 1,000 * $100 = $100,000

 

[wxytrader]

Initial Situation:

• Company Value: $1,000,000
• Number of Shares: 10,000
• Share Price: $100

Existing Shareholder:

• Shares Owned: 1,000
• Ownership Percentage: 10%
• Value of Holdings: $100,000

New Share Offering:

• New Shares Issued: 5,000
• Price of New Shares: $100
• Capital Raised: $500,000

Existing Shareholder:

• Shares Owned: 1,000
• Ownership Percentage: 6.67% (1,000 / 15,000)
• Value of Holdings: 1,000 * $100 = $100,000

You go from owning 10% to owning 6.7%...not even factoring the impact from dilution in share price. So you end up with a smaller piece of the pie that is diminishing in value.

 

[engineering]

Or you should keep track of the price of your shares and sell them off if the price is too high.

Generally a company should be comparing the cost of borrowing money at interest vs the cost of selling shares. In some cases it's cheaper to sell shares than to borrow money, even from a shareholder perspective.

That assumes a mature company being managed a appropriately that is planning to someday pay dividends. If you're buying super high PE no dividend unicorns, expect to face some risk to match up with the return those here love to brag about.

What OP described is similar to a "rights offering" which IMO sucks. Existing shareholders get strong armed for money.

Except that OP's idea of forcing the company to pay him money at at thim that the company is trying to raise money is silly. Just where are they going to get the money? Expect maybe to be paid book value divided by you fractional ownership of the company. As in a tiny fraction of what you could get just selling them on the market.

 

[wxytrader]

Or you should keep track of the price of your shares and sell them off if the price is too high.

Generally a company should be comparing the cost of borrowing money at interest vs the cost of selling shares. In some cases it's cheaper to sell shares than to borrow money, even from a shareholder perspective.

That assumes a mature company being managed a appropriately that is planning to someday pay dividends. If you're buying super high PE no dividend unicorns, expect to face some risk to match up with the return those here love to brag about.

What OP described is similar to a "rights offering" which IMO sucks. Existing shareholders get strong armed for money.

Except that OP's idea of forcing the company to pay him money at at thim that the company is trying to raise money is silly. Just where are they going to get the money? Expect maybe to be paid book value divided by you fractional ownership of the company. As in a tiny fraction of what you could get just selling them on the market.

The money would come from the share offering lol..paid in dividends or options to sell at the offering price for a certain amount of time .. incentivized.
That way new buyers into the offering have to factor in the the company may have to buyback x amount of shares on a certain date. If they don't have the cash to do so then they will have to borrow money or do another share offering lol. This whole cash grab with zero consequence is the problem.

The job of the CEO is to protect shareholder value, and a share offering enriches the company at the expense of its shareholders. Everything should go to a vote...offerings, borrowing money and acquisitions. The CEO of a company should be a civil servant type job with minimal salary. Most of these companies losing money would be profitable if you deducted all the inflated salaries which tells you that these CEOs, COO's etc aren't worth the money they are receiving.

 

[engineering]

The CEO of a company should be a civil servant type job with minimal salary.

Hahahaha!

You can't make this up.

If they don't have the cash to do so then they will have to borrow money or do another share offering lol.

Sure buddy! People will be lining up for an offering that requires them to pay more than shares are trading for on the open market just to satisfy your sense of entitlement.

 

[wxytrader]

Hahahaha!

You can't make this up.



Sure buddy! People will be lining up for an offering that requires them to pay more than shares are trading for on the open market just to satisfy your sense of entitlement.

You've been so brainwashed by this shell game that an equitable concept sounds ridiculous to you LOL. These guys are paid to make the shareholders money. They should only get paid a portion of profits not by salary.

 

[ironchef]

You've been so brainwashed by this shell game that an equitable concept sounds ridiculous to you LOL. These guys are paid to make the shareholders money. They should only get paid a portion of profits not by salary.

You shouldn't trade, otherwise you too are a participant.

 

[wxytrader]

You shouldn't trade, otherwise you too are a participant.

I don't don't typically trade companies for this reason lol...I don't trust my money with some over paid charlatans.

Also it's not a terrible strategy to bet against companies with CEOs that have a shoddy history...a leopard never changes it spots.

 

[ironchef]

I don't don't typically trade companies for this reason lol...I don't trust my money with some over paid charlatans.

Also it's not a terrible strategy to bet against companies with CEOs that have a shoddy history...a leopard never changes it spots.

If you trade index funds, it is basically the same.