How to Calculate the Original Price Per Share

by Ryan Menezes ; Updated April 19, 2017
Stock dilution divides a firm's equity among more shares.

A stock's price per share changes when a company issues a new offering. The stock issue raises new equity for the company, however it dilutes the shares as each share represents a smaller portion of the company. If the company offers the shares at an artificially low price, it will not gain enough equity to justify the stock dilution to the original shareholders. You can calculate the original price per share of the stock from the company's equity, and the number of shares it issued before the dilution.

Step 1

Multiply the stock's price by the total number of the firm's outstanding shares. For example, if the stock's current price is $150, and the company has issued 1,200 shares: $150 × 1,200 = $180,000.

Step 2

Subtract the number of shares from the last offering from the total number of shares. For example, if the last offering included 200 shares: 1,200 - 200 = 1,000.

Step 3

Multiply the price of the stock during the last offering by the number of offered shares. For example, if the company offered the shares at $100 then calculate $100 × 200 = $20,000.

Step 4

Subtract this added equity from the total from Step 1: $180,000 - $20,000 = $160,000.

Step 5

Divide this value by the number of shares from Step 2: $160,000 ÷ 1,000 = $160. This was the original price per share before the stock dilution.

About the Author

Ryan Menezes is a professional writer and blogger. He has a Bachelor of Science in journalism from Boston University and has written for the American Civil Liberties Union, the marketing firm InSegment and the project management service Assembla. He is also a member of Mensa and the American Parliamentary Debate Association.

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