It is the price at which the company's total equity value is unchanged by the raise: (old market cap + gross proceeds) ÷ new share count. It credits the company with every dollar raised, so it is the optimistic case. It is a reference point, not a forecast — the market frequently reprices further because an offering also reveals information about how badly the company needed cash and what price buyers demanded.
Reading the result
Three numbers do the work.
Ownership diluted by is the proportion of the company your existing shares no longer represent. If you held 0.10% before a raise that increases the count by 25%, you now hold 0.08% — a 20% reduction in your claim. Your share count didn't change; what each share entitles you to did.
Value-neutral price shows the mechanical effect. When an offering is priced at a steep discount, this number lands below the current price even after crediting the full proceeds — which is the arithmetic reason discounted offerings tend to pull the stock toward the deal price.
Fully diluted count includes attached warrants. Most small-cap deals carry warrant coverage, and those warrants are a second tranche of dilution that arrives specifically when the stock recovers above the strike. That is why a heavily warranted stock often stalls at a particular level: the supply appears exactly there.
Raise at a discount → existing holders diluted → new holders own stock below market with warrants attached → stock rallies → warrants exercise → more supply at the strike. Each step is disclosed in advance in the prospectus. Almost nobody reads it.
What this doesn't model
- Variable-rate convertibles. Notes converting at a discount to a trailing market price create a feedback loop — lower price, more shares, lower price. A single static calculation can't capture that. Run the calculator repeatedly at successively lower prices to see the shape of it.
- Underwriting fees. Gross proceeds here are shares × price. The company nets less — typically several percent goes to the placement agent, plus expenses.
- Authorised share limits. A company can only issue up to its authorised count. When a proxy asks to raise that ceiling, read it as intent to issue.
- Market reaction. This is arithmetic. Prices are set by people, and the signal an offering sends often matters more than the dilution itself.
To find these deals before they price — shelf registrations, ATM programmes, 424B5 supplements and warrant overhangs — see how to read an SEC filing. For why new supply moves thin stocks so violently, see float and short interest explained.
This calculator is a general educational tool that performs arithmetic on figures you supply. It is not investment advice, not a valuation, and not a recommendation regarding any security. Actual outcomes depend on deal terms, fees, market conditions and factors not modelled here. See our full disclosures.