Issuing new shares to raise money, which dilutes each share
A capital increase is a company issuing new shares to raise money. The cash funds equipment or research, but with more shares outstanding, earnings per share are diluted. That is why the price often falls right after such an announcement. Shares may be offered to existing holders or placed with a specific investor.
A company with 1,000,000 shares that issues 200,000 more dilutes earnings per share by about 17%.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.