How will the issuance of 239,565 RSUs and 23,542 NQSOs affect Guardant Health’s share dilution and earnings per share?
The 239,565 RSUs and 23,542 NQSOs represent a total potential increase of roughly 263 k shares to Guardant Health’s capital base. At today’s float (≈ 30 M shares) this adds about 0.9 %‑1.0 % dilution. Because RSUs are “restricted” and vest only with continued employment, the timing of actual share issuance will be spread over the next 12‑24 months, but the market will already price‑in the incremental supply. The modest dilution will push the earnings‑per‑share (EPS) denominator upward, trimming the headline EPS by a comparable 0.9‑1 % if earnings remain unchanged. In practice, analysts will likely adjust the EPS forecast downward by a few cents per share to reflect the new share count, which can modestly compress valuation multiples (e.g., P/E) unless earnings growth outpaces the dilution.
From a trading standpoint, the dilution is small enough that it should not trigger a sharp sell‑off, but it does add a slight downside pressure on the stock’s price‑to‑earnings ratio and may prompt short‑term technical weakness. Guardant’s chart has been trading in a broad‑based uptrend, holding above its 50‑day moving average, but the upcoming earnings‑release window (Q4 2025) will be a key test. If the company can demonstrate accelerating revenue growth or margin expansion that more than offsets the 1 % share increase, the stock can stay on the upside. Conversely, if earnings miss expectations, the extra shares will magnify the price impact, potentially breaching the 20‑day SMA and opening a downward channel.
Actionable take‑away:
- Short‑term: Anticipate modest price pressure as the market digests the dilution; consider a light‑to‑moderate short position or a tight stop‑loss long if you remain bullish on the growth narrative.
- Medium‑term: Focus on Guardant’s earnings trajectory—if Q4 2025 guidance shows >10 % YoY revenue growth, the dilution will be negligible and the stock can resume its uptrend. Otherwise, the incremental shares could erode momentum and push the pair‑trading spread wider.
In short, the RSU/NQSO grants will marginally dilute shares and trim EPS, but the real market impact will hinge on whether Guardant can deliver earnings growth that outpaces the ~1 % increase in share count.