I see the words "diluted share" a lot. What exactly is a diluted share?
2006-10-10 18:14:21 · 3 answers · asked by Phillip 3 in Business & Finance ➔ Investing
You probably know what a stock is, basically when a company sells itself to the public. It can sell even more off itself off instead of taking out a loan. That's why it's called dilluted shares. It may cause the price of the shares that are out now as more shares hit the market. This doesn't have to be a bad thing if the investment pays off and causes the company to be worth a lot more. CHK offered more shares this year so they could use the money to buy out another company.
2006-10-10 18:21:36 · answer #1 · answered by gregory_dittman 7 · 0⤊ 0⤋
If a company has a million shares outstanding and earns a million dollars, the earning per share is $1.00. Now lets assume that the company had issued stock options to its key employee, the CEO for 100,000 shares and the CEO exercises those options. The outstanding shares are now 1,100,000. But the earnings are still one million so the earnings per share have dropped to $0.909 per share. The stock holder equity has been diluted. That has been a real problem for the earnings of many companies. They are flooding the market with exercised stock options and sticking it to the public. Cisco is a prime example.
2006-10-11 07:46:55 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Hi, i suggest a great site with plenty of Issues related to your investing and everything around it. it also provide clear and accurate answer to many common questions.
I am sure that you can get your answers in this website.
http://investing.sitesled.com/
Good Luck and Best Wishes!
2006-10-11 09:24:36 · answer #3 · answered by stock.geek 2 · 0⤊ 0⤋