Talk:Stock dilution

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search
WikiProject Finance & Investment (Rated Start-class, Mid-importance)
WikiProject iconThis article is within the scope of WikiProject Finance & Investment, a collaborative effort to improve the coverage of articles related to Finance and Investment on Wikipedia. If you would like to participate, please visit the project page, where you can join the discussion and see a list of open tasks.
Start-Class article Start  This article has been rated as Start-Class on the project's quality scale.
 Mid  This article has been rated as Mid-importance on the project's importance scale.

Death spiral[edit]

Can can anyone with better know-how please correct and expand the 'death spiral' stuff. I understand from the Economist that these vehicles are increasing in Japan, even though they are decreasing in N/A. 18:52, 20 October 2006 (UTC)


The article is, if not POV, quite dollar-centric. Naphra 22:38, 22 December 2006 (UTC)

Wikification & Clean up[edit]

I've posted what I believe to be a wikified and cleaned up version of this page. I'm very new at this, so please any comments on improvement are welcome. Also I am NOT a stock/financial expert, so please inspect my editing. I would like to remove the wikification and clean up tags after a short review period. Keenantrue 00:04, 26 July 2007 (UTC)

Factual question[edit]

The following was posted by directly into the article. I put the "dubious" tag in its place.

I do not believe this is correct. It simply is not true that 95% of future earnings increases will go to holders of options equal to 5% of the company's outstanding shares. The option holders in the example above, assuming they are in the money and exercise, will only be entitled to 5% of the total earnings and 5% of any earnings increase.

-- Beland (talk) 22:15, 5 June 2012 (UTC)

The link referenced should have answered your issues. You read "% of earning increase" and thought "% of earnings". Big difference. As explained with the math, the value of options grows at a multiple of the earnings growth, so a 5% portions of today's earnings does NOT equal a 5% portion of tomorrow's earnings. Can you see any math errors in the proof/example given at the link? It all comes down to math. (talk) 14:51, 15 August 2013 (UTC)

I've marked the source as unreliable. That may not be strong enough of a statement, as the math formula seem to give insane results with many inputs (try 30 P.E. and 10% outstanding options, telling you that option holders get 300% of the increase, leaving everyone else with -200%?). Is there a better source for this? (talk) 20:16, 28 May 2015 (UTC)

...reduces an investor's stock price...[edit]

The first paragraph, at end, reads:

 "A broader definition specifies dilution as any event that reduces an investor's stock price below the initial purchase price."

It doesn't seem right, because if you bought the stock at $20, it went to $50, then the number of shares outstanding increased due to some event (such as employees exercised stock options) causing the stock to drop to $45, this would still be stock dilution even though the price didn't go below the initial purchase price. (talk) 06:21, 14 May 2014 (UTC)