Talk:Stock dilution

Death spiral
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.24.82.95.165 18:52, 20 October 2006 (UTC)

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

Wikification & Clean up
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
The following was posted by 207.154.85.237 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. 174.6.28.150 (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? 208.72.125.2 (talk) 20:16, 28 May 2015 (UTC)

...reduces an investor's stock price...
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. 71.139.160.140 (talk) 06:21, 14 May 2014 (UTC)