The current number of shares and the number of shares that may increase in the future are different.
Try writing down the issued shares, outstanding shares, and potential shares in separate columns.
Table of contents
Remember this first
First, 3 things to remember
- 1The authorized share limit and the number of shares already issued are different.
- 2Rights that will become shares later are recorded separately.
- 3If new shares are created, your ownership percentage may also change.
Do not confuse the four figures.
Authorized shares are the limit of the authority to issue shares, while issued shares are those actually issued. Outstanding shares are the number representing the volume available for trading in the market; you must check the basis of the data.
Rights that can become shares later, such as warrants or convertible bonds, are viewed separately as potential shares. It is easy to think of a map organizing these four columns as the capital structure.
If the total number of shares increases, your percentage may decrease.
If you create 2,000,000 new shares for every 8,000,000 existing shares, the total is 10,000,000 shares. The new shares become 20% of the total, and the existing shares become 80%.
The table below is for ratio calculations. It does not necessarily mean that the stock price will drop by 20%. You must also look at the cash brought into the company and how that money will be used.
| Item | Hypothetical calculation |
|---|---|
| Total number of shares | 8,000,0002,000,000=10,000,000 |
| Proportion of new shares | 2,000,000 ÷ 10,000,000 = 20% |
| Total percentage of existing holders | 100% → 80% |
| Stock price change | You cannot tell from this calculation alone. |
Do not add what has already been changed.
Warrants are the right to buy shares under certain conditions, and convertible bonds are company debt that can be converted into shares. If you add volume that has already been exercised and included in issued shares to potential shares, it is double-counting.
Check at what price and by when they can be converted, and how many shares can be created. Also, remember that the sales limit written in the documents is different from the cash already received.
You should not make such assumptions
“All registered shares are currently circulating in the market.”
Registration for sale and actual issuance are different. Also, check separately whether the volume is currently tradable.
Check what you have read.
- Have you divided the available limit by the quantity already issued?
- Did you add the already changed stock values again?
- Have you distinguished between the sales limit and the cash received?
Apply what you read to the actual screen
Try it on WAPE
Source and scope of verification
Reviewed · Version 2
- Applied Therapeutics · Prospectus Supplement (2023-08-11)New window
Corporate filings / SEC EDGAR · Verify 2026-10-20
Document examples illustrating the distinction between ATM limits and actual sales · Sales conditions based on market price; not a description of the company's current status · Examples of warrant exercise price, duration, quantity, adjustments, and ownership limit conditions - Convertible SecuritiesNew window
SEC Investor.gov · Verify 2026-10-20
Definition of convertible securities · Conversion conditions and potential for dilution - Investing in an IPONew window
SEC Investor.gov · Verify 2026-10-20
Distinction between public offering/market price, restricted stock, and lock-up agreements
This is educational material for observation and information comprehension. Hypothetical examples do not represent actual stocks or performance and do not provide buy or sell recommendations.