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Shares Dilluted ??

  • 11-03-2011 10:10pm
    #1
    Rebel1977
    Registered Users, Registered Users 2 Posts: 802 ✭✭✭


    a number of years ago I bought shares in a company but forgot about them untill lately, I enquired a few weeks back and was told there was a dillution of the shares 1 in 10 etc what does this mean for my shares ?


Comments

  • #2
    pirelli
    Registered Users, Registered Users 2 Posts: 2,876 ✭✭✭pirelli


    Rebel1977 wrote: »
    a number of years ago I bought shares in a company but forgot about them untill lately, I enquired a few weeks back and was told there was a dillution of the shares 1 in 10 etc what does this mean for my shares ?

    I think that sounds like a 10% dilution.


  • #3
    coylemj
    Registered Users, Registered Users 2 Posts: 25,622 ✭✭✭✭coylemj


    Without knowing the name of the company it's not possible to tell you exactly what happened to your shares.

    Your shareholding can get diluted if there is a new share issue and you do not take up your right to subscribe. In that scenario you will end up owning a smaller % of the company because there are now more shares in issue but you still own the same number of shares.

    On the other hand a company may split the stock if the share price starts to go up to a level that potentially deters small shareholders. Over the years companies like IBM and Boeing who have existed for decades will do multiple splits. In this case there is a split so on Friday you own 1,000 shares and on Monday the company does a 2 for 1 split so now you own 2,000 but your shareholding is not diluted since you still own the same % of the company. In that case the share price will typically be halved on the day the new shares start trading.


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