Hi Stefan - How are you calculating the dilution ratio? What impact does the performance of the share price have on the dilution ratio? For instance if a companies share price has mostly trended down vs up? IE Veeva in the last couple years. If their share price CAGRs at say 10%+ for the next few years, how will that impact their future 'dilution ratio' vs their 'dilution ratio' over the last 3 years. Thanks! Bart
I was looking at https://shareholderperks.co.uk/ and I wondered if there had been companies that diluted shares but offered existing shareholders additional benefits that weren't offered to the new shareholders? I was considering investing in some of the companies in pre-IPO stage and wondered if it might happen?
Hi Stefan, I tend to disagree on this one: Buybacks are only reasonable when the stock is undervalued (from the managements perspective), not as a tool to counteract SBC dilution. When valuing a company I think SBC should always be subtracted from FCF to get a fair view on the earnings. If - after that adjustment - you decide the company is worth it, fair enough. WDYT?
Hi Stefan - How are you calculating the dilution ratio? What impact does the performance of the share price have on the dilution ratio? For instance if a companies share price has mostly trended down vs up? IE Veeva in the last couple years. If their share price CAGRs at say 10%+ for the next few years, how will that impact their future 'dilution ratio' vs their 'dilution ratio' over the last 3 years. Thanks! Bart
For dilution aspects I don‘t take the future stock price change into consideration. Usually I am just looking into the normalized chart of the number of shares outstanding e.g. Veeva: https://stocksguide.com/en/charts/Veeva-Systems-Inc-Class-A-US9224751084?metrics%5B%5D=price&metrics%5B%5D=shares_outstanding&stocks%5B%5D=Veeva-Systems-Inc-Class-A-US9224751084&data_format=normalized&date_range=threeYears
Hi,
I was looking at https://shareholderperks.co.uk/ and I wondered if there had been companies that diluted shares but offered existing shareholders additional benefits that weren't offered to the new shareholders? I was considering investing in some of the companies in pre-IPO stage and wondered if it might happen?
Hi Stefan, I tend to disagree on this one: Buybacks are only reasonable when the stock is undervalued (from the managements perspective), not as a tool to counteract SBC dilution. When valuing a company I think SBC should always be subtracted from FCF to get a fair view on the earnings. If - after that adjustment - you decide the company is worth it, fair enough. WDYT?