Advanced Micro Devices, Inc. Message Board
you are viewing a single comment's thread.
view the rest of the posts-
what will add'l shares do to stock price?
Your own numbers prove one of AMDACE's points - current shareholders pay for that capital raise with the loss of value of their investment.
Example:
1. Someone purchases 10 shares of XYZ at $15 = total value = $150
2. Company dilutes, from 500 to 600 million shares outstanding
3. Stockholder's shares readusted from $15 to $12.50 share, total value after dilution $125.00 The shareholder just lost 20% of his investment.
AMD's case is much worse because it will likely double the amount of shares outstanding and cut shareholder's holdings to half its current value.
You don't want to be shareholder when this happens.-
There is no such thing as dilution anymore.
Naked shorts can sell an unlimited number of shares.
Total shares outstanding has no meaning.
Plus- 2 Replies to p_l_u_s_c_a_r_d
-
dilution isn't about shares, it's about proportionate control
if the newly authorized shares go to current shareholders in a split, then the price and float have changed without changing anyone's control, so nobody's wealth changes
but, if they're issued outright or via options to "pay" suppliers or creditors or employees, then current shareholders lose value through dilution
the borrowing of shares by shorts does not create new shares or expand corporate control, so it does not dilute the value of the outstanding shares and only affects the wealth of the short seller in terms of risk premium
and short-selling induces an upward pressure due to expectation of covering purchases, so any price-decrease from momentary selling activity is balanced by that predictable increase from panicked buying activity
AMD management has shown no interest in any shareholder other than itself; expecting it to start now would be insane, as would a split of a $14 stock; so expect them to start passing out your property to third parties in lieu of paying cash to stay alive -
"Naked shorts can sell an unlimited number of shares.
Total shares outstanding has no meaning"
When I read the above my jaw hit the floor. Sooooooo, I called my Brokerage, Fidelity, and talked to a rep there who said "only shares borrowed from a MARGIN account can be used to sell short a stock. Shares held in a CASH account cannot be loaned out for a short sale.
Absence of available shares to loan out from MARGIN accounts will shut off all short sales on a particular stock.
Thus, if all shares of XYZ Co. were held in CASH accounts no short sales would be allowed.
Thus, if all shares of XYZ Co., held in all accounts that held such shares, were already loaned out for short sales none could be sold short after that time until some were returned to a particular account, at a particular brokerage firm, they, investors, then would again be available to loan for a short sale with that firm.
To buttress that response I offer this. New tax law says that when a brokerage loans out shares of XYZ Co. and XYZ Co. pays a dividend, the special, current tax law, 15% max rate of taxation on those dividends belongs to whomever bought the loaned out shares. The real owner, who allowed his stock to be loaned out via having it held in a margin account will be taxed at the normal individual rate with the dividend being received at the same time as the "NEW" owner of the borrowed shares. It is unclear to me, as some here will pick up on, that a dividend is being paid to two holders on the same shares. Who is doleing out this money is a question. I assume the Brokerage who loaned out the shares ponyed up the $'s.
I confirmed that with Fidelity, being concerned bc alot of my holdings are in my individual account and on the margin side. They, after I mentioned my concern said that Fidelity, and for all I know other brokerages too, was taking care of that internally to negate the negative effect on the REAL owner of the shares.
This is the rule in the USA according to the Fidelity Rep.
FWIW,
H
-