Allstocks.com's Bulletin Board: Increasing Authorized Shares

This is topic Increasing Authorized Shares in forum General Investing Topics at Allstocks.com's Bulletin Board.

To visit this topic, use this URL:
http://www.allstocks.com/stockmessageboard/ubb/ultimatebb.php/ubb/get_topic/f/9/t/001714.html

Posted by rewclaus on :

What does it mean when a company decides to increases their authorized shares? Well I know that it means more shares are available to do things with (employee benefits, exchanges, common folk buying it, etc.). But what does it mean about the company. Is it a sign of bad or good?

For example:

ZZZZ.OB is trading at .0004, and they have 10B shares of common stock (not outstanding, that's the total amount they started with). And just recently they decided they want more shares. So the file for an increase from 10B to 50B.

Is it good or bad? [Confused]

Posted by kermit42 on :

Depends on why they are increasing the shares. If it's to raise money for investment, that is a good thing IF the investments are sound (ex., to buy another company that adds a useful angle to their business). But if it's to raise money for operating expenses, that's bad because it means they're operating at a loss, unless they're a new company, in which case they get a free pass for a while. So basically, it depends on their business plan and whether or not you believe in it. Oh, and management--do you trust them?

See, it's simple.

Posted by rewclaus on :

thanks kermit. i hadn't though of any of that.