Recently, I saw someone asking whether a company's stock price will rise after a capital increase.

This question is actually more complicated than it seems because a capital increase itself does not directly determine the stock price movement.

Let's first understand the logic.
When a company conducts a stock capital increase, the supply of shares in the market will increase, which theoretically puts pressure on the stock price.
But in reality, the effect of a capital increase depends on how investors view this event.
If everyone believes that this money can help the company grow, the stock price might actually go up;
Conversely, if they worry about dilution, the stock price will fall.

I recall the case of Tesla in 2020.
At that time, Tesla announced to issue $2.75 billion in new shares, priced at $767 per share, aiming for global expansion and building new factories.
Generally, a stock capital increase should drag down the stock price, but Tesla's market enthusiasm was very high at that time, and investors were confident in the capital increase plan, believing that this money could drive the company's development.
As a result, the stock price actually rose.
This is a typical example of market confidence outweighing dilution effects.

Looking at TSMC's cash capital increase at the end of 2021.
TSMC announced to raise funds through a stock increase to expand its business footprint, and the market responded enthusiastically, with the stock price also rising.
As an industry leader, TSMC has stable operations, and most existing shareholders support the capital increase and buy new shares to maintain their ownership ratio, which prevents too much dilution of equity.
More importantly, the market believes that this capital will be used for R&D and expansion, paving the way for future growth.

Therefore, to judge the impact of a stock capital increase on the stock price, three key points should be considered.
First is supply and demand: if market demand for the new shares is high, the stock price can stay supported;
Second is investor sentiment: if the capital increase is seen as a positive signal, it is beneficial; if seen as negative, it is detrimental;
Third is shareholder support: if existing shareholders are willing to participate and maintain their proportion, the dilution effect can be alleviated.

Honestly, predicting stock price movements solely based on a capital increase is very easy to be misled.
The company's profitability, industry outlook, overall economic environment, and market sentiment all influence stock performance.
A cash capital increase is just one part of the picture, not a decisive factor.
When investors consider participating in a capital increase, they should thoroughly understand the company's fundamentals and market trends, rather than just focus on the news of the increase itself.