OptionsEach year in Q2, employees get options exercisable at (roughly) the pps at the time of issues. This year the company issued 204,000 at $1.50. In the past, some here have complained about this, particularly when the stock price has not performed well. The argument is the dilutionary effect on the stock value when they are exercised. Note that there have been no such comments this time.
Let’s have a look at this effect. If the stock price goes nowhere then the effect is zero, since they never get exercised. What happens then if the stock does well? Let say the stock price goes to $2.50 and all options are exercised at this price. Then the dilution is $1 per option. Since the number of options is roughly 1% of the outstanding shares then the dilution is 1 cent per share. So, your position goes up significantly, but the stock value is now $2.49. Would you be upset? Let’s use an extreme example, that the stock suddenly goes to $11.50! then dilution is a massive 10 cents per share. Again, would this bother you?
So, the moral is, forget worrying about the effect of the issuing of options.
Piper