Dilution

• When a company issues new shares after it has already issued shares, the company may risk diluting the value of the shares currently on the market. When the value of shares is diluted, the investors' return on investment of these shares is diluted. However, if the issuance is done legally, more shares previously held privately will be made public, but new shares will not be created, thereby preserving the company's value.
  
  

Supply vs. Demand

• However, as a general rule, as more shares of a company are made available for sale, the price of each share will decline, as shares will become more common. This is because of the law of supply and demand. When the supply of a good is higher than the demand for the good, the price of the good generally drops. Increasing the supply of stocks can lead to a drop in an investor's ROI.
  
  

Raising Capital

• One of the benefits of issuing stocks is that it allows a company to raise capital without taking on more debt. When a company sells stocks, the company receives money from the investors who are buying it. By raising capital, the company can expand and, ultimately, sell more products or gain efficiency. In the long term, this can raise investors' ROI in the company as its profits increase.
  
  

Market Sentiment

• When a company issues stock, much of the ROI for the investor actually leaves the company's hands. While the company can choose the dividends that it provides shareholders, it has no influence on the price that the market sets for the company. Thus, the ultimate effect of issuing stock on ROI is unknown, as it will depend on the market's view of the company, which can never be predicted with total accuracy.