Recently, many people have been asking whether a cash capital increase will cause the stock price to rise. To be honest, there is no absolute answer to this question. Let me break down the underlying logic.

A cash capital increase, simply put, is a company issuing new shares to raise money, possibly for expanding factories, paying off debt, or investing in new projects. On the surface, once new shares are issued, the supply of stocks increases, which theoretically should dilute existing shareholders' equity. But the actual situation is often much more complicated.

First, I’ll discuss the three core factors that influence stock prices during a cash capital increase: supply, market sentiment, and shareholder ownership ratio. An increase in supply is objective, but how the market perceives this is the key. If investors believe that this capital can create value for the company, the stock price might actually go up. Conversely, if the market worries that the capital increase will harm the company's profitability, the stock price could decline.

Let me illustrate with two real cases. In 2020, Tesla announced a cash capital increase, issuing $2.75 billion worth of new shares at $767 per share. At that time, Elon Musk’s story was extremely attractive, and investors’ confidence in Tesla was sky-high. Although, in theory, new shares would dilute existing holdings, the stock price didn’t fall after the announcement—in fact, it surged. Why? Because the market believed that this money could help Tesla expand production globally and open new factories, further increasing the company's value. So, the cash increase turned into a positive signal.

Another example is TSMC. At the end of 2021, TSMC announced a cash capital increase plan, which was also very well received. As a global leader in semiconductors, TSMC has stable performance and a good reputation. Existing shareholders generally supported the plan and were willing to buy more shares to maintain their ownership ratio. This helped keep the shareholder structure relatively stable. Plus, the market believed that the funds would be used for R&D and factory expansion, driving future growth, which also pushed the stock price higher.

From these two cases, we can see that the impact of a cash capital increase on stock prices depends on several variables: the company's fundamentals, investor confidence, the purpose of the capital increase, and even the overall economic environment. Relying solely on the fact of a cash increase to predict stock price movements can easily lead to mistakes.

Regarding the pros and cons of a cash capital increase, the advantages are clear—companies can raise significant funds, improve their financial structure, and reduce debt burdens, all of which are long-term benefits. The disadvantages also exist—issuing new shares dilutes existing shareholders’ equity, market reactions are uncertain, and there are various fees and issuance costs involved.

Finally, a reminder: if you want to participate in a cash capital increase, you need to be mentally prepared. After paying, you won't immediately receive the new shares; you'll need to wait until the company completes accounting, exchange approval, and shareholder registration processes. This can take some time. Therefore, before investing, you must have a clear understanding of the company's fundamentals and market trends—don't make decisions based solely on the fact that a cash increase is happening.