Follow-on Offering

A follow-on offering is when a company that's already publicly traded issues and sells new shares to the public. Think of it as a second (or third, or tenth) round of fundraising after the company's initial public offering, or IPO. You'll see these announced in financial news, and they matter because they can dilute existing shareholders' ownership stakes—meaning your piece of the pie gets smaller if you already own shares. On the flip side, the company gets fresh cash to fund operations or pay down debt. For example, if TechCorp Inc. issued 10 million new shares last year and now issues 5 million more, existing shareholders' ownership percentage decreases slightly.