Additional shares put on the market by a company that has already gone public. Reasons why a company might use add-on financing include raising cash to fund existing operations, expanding operations or paying for a new project. While an add-on is useful for raising money, it can cause the company's share price to decline, and current shareholders to be diluted.


From the existing shareholders' perspective, the issuance of add-on stock is a bad thing because it usually reduces the value of the stock they own. More shares mean that existing shareholders will see their percentage of ownership in the company decrease. They may also see the stock's earnings per share decline. However, if the add-on is able to increase earnings and shareholder value in the long-term, it will generally be viewed as a positive decision.

  1. Secondary Offering

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  2. Initial Public Offering - IPO

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  3. Offering

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  4. Public Offering

    The sale of equity shares or other financial instruments by an ...
  5. Subsequent Offering

    An offering of additional shares after the issuing company has ...
  6. Impact Day

    The date on which a corporation makes a secondary offering of ...
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  1. In an IPO, who is a greensheet distributed to and for what purpose?

    One of the most talked about documents that arises in the process of introducing a new issue is the greensheet. This is an ... Read Full Answer >>
  2. How does an IPO get valued? What are some good methods for analyzing IPOs?

    The price of a financial asset traded on the market is set by the forces of supply and demand. Newly issued stocks are no ... Read Full Answer >>
  3. Are IPOs available to short sell immediately upon trading, or is there a time limit ...

    The quick answer to this question is that an IPO can be shorted upon initial trading, but it is not an easy thing to do at ... Read Full Answer >>
  4. How can companies use the cash flow statement to mislead investors?

    Cash flow is a means for most investors to examine the actual economics of a business they might invest in, especially from ... Read Full Answer >>
  5. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  6. What is a stock split? Why do stocks split?

    All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision ... Read Full Answer >>

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