Is a stock split better for an investor than a stock dilution?
Asked 4 years ago
I need to confirm: A stock split would be more preferable to a stock dilution for an investor, correct?
Andrew Moran
Thursday, June 17, 2021
Yes, stock splits are superior to stock dilution because the ownership representation of every shareholder remains the same.
Put simply, stock dilution increases the number of shares in the financial market, diminishing the value of your investment. A stock split divides the present number of shares into new shares to enhance the stock's liquidity, leaving the value of your stock unchanged.
Companies will typically take advantage of a boom when they issue new shares. GameStop and AMC recently created millions of new shares.
When it comes to splits, Tesla Motors was one of the more notable splits occurring in recent memory.
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