Watered Stock
Stock that is issued with a value much greater than the value of the issuing company's assets. Watered stock can be caused by excessive stock dividends, overvalued assets and/or large operating losses. Investopedia Says:
Assets can be overvalued for several reasons, including inflated accounting values or excessive issue of stock (through a dividend or employee stock-option program). This term is thought to originate from ranchers who would feed their cattle large amounts of water before market day to make them heavier, fetching a price higher than their worth. Related Terms:
Diluted EPS
Earnings Per Share - EPS
Overbought
Overvalued
Stock Dividend
Value Investing
Value Stock
Value Trap |