The Financial Post reports in its Friday edition that new shares are often seen as a way to dampen sentiment because stockholders get diluted. A Bloomberg dispatch to the Post reports that in this high-energy market, however, that idea has been turned on its head. Intel's shares have risen nearly 90 per cent since early August after the chipmaker commenced $18-billion in stake sales to the U.S. government, Softbank Group and Nvidia to boost its balance sheet with fresh capital.
The new equity decreases existing stockholders' interests by about 14 per cent, reports Bloomberg. Intel shareholders might see further dilution if U.S. government-held warrants are exercised. However, investors are currently more optimistic about cash availability than concerned about share dilution. Asset manager Fulton Breakefield Broenniman's Michael Bailey
says: "Investors are front-loading all this good news and really diminishing the real cost -- with all of these stake sales there's massive dilution. It's a plus and minus situation. Investors are betting that the plus is better than the minus." It is the same with Intel rival AMD, which signed an agreement with OpenAI on Oct. 6 that could generate tens of billions in revenue.
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