RE:RE:RE:RE:RE:RE:RE:Enough With The Dilution All investors start investing at some point. some have a steeper learning curve than others. However, I've noticed there are a lot of people on this board who simply don't understand what "shares outstanding" are.
These are not 20 million shares that dissapear once sold. These shares will exist in perpetuity until the company buys them back. These share, all these shares from all of their financings dilute each shareholder's ownership in the company. These extra shares outstanding dilute any earnings that flow to the bottom line.
I think a little math might help some of you guys to understand exactly what's going on, because most of you don't seem to understand.
examples with very generous numbers......
Shares Outstanding......400,000,000 approx (for rounding ease)
pretend revenue in the future.....1 Billion
pretend net profit margin....10%
Earnings Per Share......25 cents = p/e of 12 at current stock price
That means if ACB was to make $1 billion in revenue this year the stock would currently be trading at a p/e of 12. Sounds pretty good right? well ACB has no net profit margin nor are they even in the same universe as $1 billion dollars.
A more realistic example with a ton of luck and great execution would be...
Shares outstanding......400,000,000
pretend revenue.....100,000,000
pretend net margin....10%
EPS.....2.5 cents
P/E of 120
and that is with a seriously favourable outlook
play with the shares outstanding number and see how it affects EPS yourself.