When a company increases shares

Thanks

HI there,

That isn't a simple yes/no question. There are many factors at play in capital raises through share issues. IMO, so long as it is used to fund growth and they pay for said growth at lower valuation levels than their current price, then it can be a good thing. But that is still a very simplistic view - there are many factors at play here.

Bottom line, it all depends on how the $$ is used and unless it is announced concurrently with a specific acquisition, that usually isn't known until later down the road. Some are excellent capital allocators and issue shares without skipping a beat. Others are poor, and it ends up dragging their price down.

In the short-term, what usually happens is the share price dips to the level at which the company is issuing the shares. Typically this is at a discount to market price to entice big institutional buyers. Long-term however, it all depends on execution.

Mat