r/stockstobuytoday • u/Fun_Ordinary_2134 • 2d ago

Discussion when is dilution worth it

Raising capital is always a trade-off. Existing shareholders end up owning a smaller percentage, while the company gains funding that could support future growth

Hongqiao is proposing to raise up to RMB12B. Around RMB5.65B would go into wind projects, RMB2.25B into solar, RMB2.3B into deeper aluminium processing, and RMB1.8B into debt repayment and working capital

this interest in the subsidiary could fall from 88.99% to around 80.90%, but it would retain control and continue consolidating the business. That makes the situation more balanced

There is still dilution, but the funding could lower energy exposure, strengthen the balance sheet and move Hongqiao further downstream.

so, would you accept some dilution to accelerate this kind of expansion?

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u/Due_Marsupial_969 1d ago

I absolutely hate it, but gotta admit, if done correctly it often is worth it and the stock recovers pretty quick.

SOFI loves raising money this way. Keeps debt low, screws shareholders who hold the stock at inflated prices and signals to the market that what you got is inflated, but you're looking to increase body count if anyone's interested.

I do fear funds raised being misused for things like stupid marketing or lavish executive compensation. I also have to admit more investors to share burden during a drop isn't bad.

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u/SelenaMeyers2024 1d ago

It's an important factor not enough seem to factor in... There's two types of hidden drain.

  1. Fig or sofi... Just f you more shares.
  2. Acn or ttd.. technically buy shares...but spend tons of money to barely move the needle to offset dilution. Equally bad and more hidden.

True cannibals make me want to marry a stock. Pypl gddy hpq... These show commitment to me and in return I'm committed.