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My personal guess is that the next one isNio, XPeng, Li Auto, not for any other reason,but simply to compete with Tesla in a price war. Take today for instance, XPeng just announced a price cut and even offered compensation benefits to customers who placed orders last year. That requires a lot of cash. Considering the profit margins of NIO, XPeng, and Li Auto,where else would they get the money to continue the price war with Tesla without issuing more shares?
Issuing more shares can greatly benefit companies, but it puts pressure on existing market liquidity, effectively 'bleeding' the stock market. Share issuance is typically negative for stock prices. Any concept or news often serves as preparation by major players either to boost or depress stock prices. Therefore, timing is crucial when dealing with secondary offerings, which should be approached selectively. Not all share issuances generate profits; often, the risks outweigh the gains.
Companies that implement secondary offerings don’t always see significant improvement in performance after completing the offering. Some even experience a sharp decline in performance post-issuance. With an expanded equity base, earnings per share decrease, harming the interests of long-term shareholders.
From the perspective of how share issuance impacts stock prices, it indeed acts as negative news for stock prices. The excess returns before the announcement of the intention to issue shares are significantly negative, indicating that the market reacts to this negative news in advance. Investors vote with their feet to express disapproval of the share issuance behavior.
If a company’s stock has passed the board of directors’ proposal for additional issuance, it still needs approval from the CSRC. In most cases, the issuance will be approved. During the application process for the additional issuance, the listed company, in order to increase the issuance price and maximize fundraising, may secretly collude with institutions to drive up the stock price. In other words, when a stock has...
Issuing more shares can greatly benefit companies, but it puts pressure on existing market liquidity, effectively 'bleeding' the stock market. Share issuance is typically negative for stock prices. Any concept or news often serves as preparation by major players either to boost or depress stock prices. Therefore, timing is crucial when dealing with secondary offerings, which should be approached selectively. Not all share issuances generate profits; often, the risks outweigh the gains.
Companies that implement secondary offerings don’t always see significant improvement in performance after completing the offering. Some even experience a sharp decline in performance post-issuance. With an expanded equity base, earnings per share decrease, harming the interests of long-term shareholders.
From the perspective of how share issuance impacts stock prices, it indeed acts as negative news for stock prices. The excess returns before the announcement of the intention to issue shares are significantly negative, indicating that the market reacts to this negative news in advance. Investors vote with their feet to express disapproval of the share issuance behavior.
If a company’s stock has passed the board of directors’ proposal for additional issuance, it still needs approval from the CSRC. In most cases, the issuance will be approved. During the application process for the additional issuance, the listed company, in order to increase the issuance price and maximize fundraising, may secretly collude with institutions to drive up the stock price. In other words, when a stock has...
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