The company needs money — what does it do?
Imagine you own a pizza restaurant and want to open five new locations. You need 5 million NOK. You can borrow the money from the bank — or you can sell new ownership stakes to investors. The latter is a share issue.
A share issue simply means that a company issues new shares and sells them to investors to raise fresh capital.
"Growth always requires something — time, energy or capital. The wise give what costs least and returns most."
— Florence Scovel Shinn
Is a share issue good or bad?
It depends entirely on the reason behind the issue:
Positive signal
The company raises money to finance growth, acquisitions or new opportunities. The money should create more value than the dilution. Long-term positive for shareholders.
Negative signal
The company needs money to survive, pay bills or save itself from bankruptcy. A desperate move that signals serious problems.
Always ask: Why does the company need the money? That is the most important question at a share issue.
"Do not let others' enthusiasm replace your own judgment. Always investigate before acting — and always act with care."
— Florence Scovel Shinn