What is an additional Listing ?

[Shwty]

Additional Listing ?

Can anybody help me to understand what an additional listing is? How might it affect a trend?
Do the new stocks normally come back in line with the current trend etc. ?
I have been trading African Gold shares for the last month or so (AFG) it has done very well though my novice trading skills have prevented me from making a penny.
Anyhow..The company has just announced that it is to list 27.1 mln new shares at 9 pence each. What does this mean?
What will it do to the share price. Mid price as I write is 13.5
Does this mean I can just buy a whole load of the new shares at 9p and sell them at the old share's current bid. I doubt this could be true.

 

[Rainmaker]

It simply means that the company has issued some new shares for some reason (a placing, rights issue, scrip, bonus, employee shares, etc). It does mean that your holding has been diluted. The additional listing is a formal notification to the exchange that the new shares are to be admitted to the market.

 

[Shwty]

Thanks for your reply. So it shouldn't really have any effect. Could it perhaps be perceived as a sign of confidence if the company sees the market makers as ready to take on more shares?

 

[Rainmaker]

It actually does have an effect - a negative one! By issuing more shares the company is diluting your stake and the earnings (the profits are divided by a greater number of shares). It could be earnings enhancing, depending on how the company spends the extramoney it raises. If the earnings on it are greater than the earnings on the business as it stands, then it is a good thing.