Stock Dilution Calculator
Answers the Question
How much will a share of my stock be worth if new shares are issued?
Calculator for Stock Dilution
What Is the Stock Dilution?
The stock dilution formula helps owners to understand how much new stock offerings will reduce the value of each share currently held.
Why Is it Important?
- Depending upon the market, selling shares may be the most sensible means of generating capital. One needs to carefully understand how this will affect share prices, however, in order to determine if the generated income is worth the cost (reduced asset value).
Formula(s) to Calculate Stock Dilution
- DILUTED SHARE PRICE = ((NUMBER OF OLD SHARES * OLD SHARE PRICE) + (NUMBER OF NEW SHARES ISSUED * NEW SHARE PRICE)) / (NUMBER OF OLD SHARES + NUMBER OF NEW SHARES ISSUED)
- Mistaking book value for market value. In many cases, especially when liquidity is low, shares may trade above or below what its financials suggest is appropriate.
- Not considering the income generating from offerings when examining changes to share prices.
Also Known As
- equity dilution