Vapor Group, Inc. Reduces Total Number of Shares of Common Stock
View Original ArticleTue, 02 Sep 2014 04:45:00 -0700 DAVIE, FL / ACCESSWIRE / September 2, 2014 / Vapor Group, Inc. (OTCQB: VPOR), (the "Company"), announced that the total number of common shares issuable to management have been reduced to 450,000,000 ...
American Equity Announces Stock Repurchase Program
View Original ArticleWed, 27 Aug 2014 13:00:00 -0700 American Equity Investment Life Holding Company , a leading underwriter of index and fixed rate annuities, today announced that its Board of Directors has authorized American Equity to repurchase up to 500,000 shares of its common stock during the next twelve months.
AAPL closes at 52-week high, approaches all-time record
View Original ArticleTue, 19 Aug 2014 20:23:35 -0700 Apple's stock closed on Tuesday with a new 52-week high, and at one point in the day threatened to top its all-time highest stock price (based on straight split-adjustment). It officially closed at $100.53, not far from its all-time split-adjusted high of $100.72, though it hit $100.68 in intra-day trading. The company's valuation also rose to a market cap of $602 billion....
VMware Announces Authorization of Stock Repurchase Program
View Original ArticleWed, 06 Aug 2014 13:01:00 -0700 VMware, Inc. , the global leader in virtualization and cloud infrastructure, today announced that its Board of Directors has authorized the purchase of up to $1.0 billion of its Class A common stock through ...
How to Calculate Stock Dilution
Stock dilution occurs when a company decides to raise capital by issuing more stock to new investors. When the "float" (the amount of shares outstanding) is increased, the investors who already own shares now have a smaller percentage of shares. Stock dilution usually occurs during a company's start-up or venture capital raising phase.
1. How does your company divide up its initial stock? When your stock-issuing company is formed, there is a certain amount of shares that belong to the company. Those shares are then divided up among the principals of the company, such as the board of directors, chief operating officer and chief financial officer. For example, a company has 2 million shares of stock when it is formed and a board member is offered 5 percent, or 100,000 shares, during the "pre-funding period."
2. What is the value of your company? As you get the company off the ground, there is essentially no value or assets. Therefore the value is essentially 0. This is also called net-tangible book value.
3. What happens when investors purchase shares in your company? They are going to offer you an amount of money for a percentage ownership in your company. Furthering the example above, say investors are willing to stake $2 million for 50 percent of the company. This immediately gives the company a value. To calculate the value, perform a simple algebra equation.
Investment / Percent Ownership = New Value $2,000,000 / .50 = $4,000,000
In this equation 50 percent is changed to decimal form to calculate the equation. The equation essentially states if 50 percent of the company is worth $2 million, then 100 percent of the company must be worth $4 million. This is referred to as the "post-money valuation."
4. How many more shares need to be added to the float based on the post-money valuation? Because you cannot take shares away from people who already have them, you must create new shares. To calculate exactly how many shares you need to add, you need this algebra equation:
x / (Original Shares Issued + x) = Percent Ownership "x" represents the number of new shares that must be added. x / 2,000,000 + x = .50 2,000,000 / (2,000,000 + 2,000,000) = .50
This means the company would need to add 2 million shares to the float to meet the new ownership demand.
5. Calculate how the new float dilutes the shares that you currently own. Using the example above, the investor was offered 5 percent of the original float, which was 100,000 shares based on 2 million original shares. He now holds 100,000 shares out of 4 million. The equation becomes:
This is just a simple illustration on how share dilution effects current and new stockholders in your company.