Subsequent Offering

DEFINITION of 'Subsequent Offering'

An offering of additional shares after the issuing company has already had an initial public offering (IPO). In a subsequent offering, the new shares are usually issued from the company's treasury, and the net offering proceeds go the company. Since a subsequent offering increases the company's shares outstanding, it has a dilutive effect, i.e., it dilutes the stakes of existing shareholders.

BREAKING DOWN 'Subsequent Offering'

A company may seek to complete a subsequent offering for a number of reasons. Investment demand for its shares may be high even after the initial offering, or it may look to raise capital to capitalize on new opportunities. Another reason could be that the company is looking to bolster its cash reserves at an opportune time, because it foresees funding challenges ahead. This may especially be the case for development-stage technology and biotechnology companies, which often have huge capital requirements in the initial years.

RELATED TERMS
  1. Dilution

    A reduction in the ownership percentage of a share of stock caused ...
  2. Secondary Offering

    1. The issuance of new stock for public sale from a company that ...
  3. Offering

    The issue or sale of a security by a company. It is often used ...
  4. Fully Diluted Shares

    The total number of shares that would be outstanding if all possible ...
  5. Issued Shares

    The number of authorized shares that is sold to and held by the ...
  6. Basic Earnings Per Share

    A rough measurement of the amount of a company's profit that ...
Related Articles
  1. Trading

    The Dangers Of Share Dilution

    Investors need to be aware of the existence of dilutive securities and how they can affect existing shareholders.
  2. Managing Wealth

    The Dangers Of Share Dilution

    Share dilution reduces the value of an individual investment and can drastically impact a portfolio.
  3. Investing

    How Does Dilution Work?

    Dilution refers to the reduction in the percentage equity ownership of a company due to additional equity being issued to other owners.
  4. Investing

    What are Issued Shares?

    Issued shares are the amount of authorized stocks a company’s shareholders buy and own. The annual report shows the number of outstanding shares.
  5. ETFs & Mutual Funds

    Calculating Basic Earnings Per Share

    Basics earnings per share measures the amount of net income earned per share of outstanding stock.
  6. Investing

    What's a Secondary Offering?

    A secondary offering is the issuance of new stock from a company that has already made its initial public offering.
  7. Trading

    Adjusting Price Charts To Secondary Offerings

    Secondary offerings may require rapid readjustment of trading strategies.
  8. Investing

    Explaining Rights Offering

    A rights offering is an offer by a company to its existing shareholders of the right to buy additional shares in proportion to the number they already own.
  9. Investing

    The Basics Of Outstanding Shares And The Float

    We go over different types of shares and what investors need to know about them.
  10. Markets

    Why Do Companies Care About Their Stock Prices?

    Read on to learn more about the nature of stocks and the true meaning of ownership.
RELATED FAQS
  1. Why do share prices fall after a company has a secondary offering?

    The best way to answer this question is to provide a simple illustration of what happens when a company increases the number ... Read Answer >>
  2. Why is the value of capital stock important to public shareholders?

    Understand what capital stock is and how it's issued and authorized. Learn why the value of capital stock important to public ... Read Answer >>
  3. Why do companies release financial figures in terms of fully diluted shares outstanding?

    Learn why companies release their financial figures in terms of fully diluted shares outstanding so as to give a true picture ... Read Answer >>
  4. Why is an increase in capital stock on a company's balance sheet a bad sign for stockholders?

    Understand what capital stock represents for a company and understand the significance for investors when a company initiates ... Read Answer >>
  5. What's the difference between basic shares and fully diluted shares?

    Find out more about basic outstanding shares, fully diluted shares, the difference between the calculation of shares and ... Read Answer >>
  6. Why would I need to know how many outstanding shares the shareholders have?

    Find out why shareholders should know how many outstanding shares have been issued by a corporation, and learn what happens ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center