Secondary Offering
Additional shares sold to the market after the IPO
Definition
A secondary offering occurs when a company that has already gone public issues additional shares to raise more capital, or when existing major shareholders (insiders, early investors) sell their shares to the public. A dilutive secondary offering increases total shares outstanding and can pressure the stock price. A non-dilutive secondary offering involves existing shareholders selling — the company receives no new capital.
Example
After its IPO, a company needs more cash for expansion. It files a secondary offering of 10 million new shares at $25 each, raising $250 million. The existing shareholders now own a smaller percentage of the company because total shares outstanding increased — this is dilution.
Related Terms
Frequently Asked Question
What is a secondary offering?
A secondary offering is when a public company issues new shares or insiders sell existing shares. New shares dilute existing shareholders; insider sales do not affect the company's capitalization.
APA Citation
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· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.