Death spiral financing

Death spiral financing is a convertible instrument that converts into stock at a discount to the prevailing market price, so that each conversion dilutes existing holders and pushes the price lower, entitling the holder to still more shares.

Also known as toxic convertible. manipulation techniques · updated 2026-09-09

Where does death spiral financing come up?

This term is used in the following manipulation techniques, each explained in full on its own page.

• Dilution death spirals — A death spiral is a convertible instrument that converts into stock at a discount to the prevailing market price, so each conversion dilutes holders and pushes the price lower, entitling the holder to still more shares.

Enforcement actions involving these techniques

See also

• Dilution — Dilution is the reduction in existing shareholders' proportional ownership when new shares are issued. It is a normal consequence …
• Convertible note — A convertible note is debt that can be exchanged for equity on stated terms. The manipulation risk lies entirely in the conversion…

Terms that refer here

Convertible note · Dilution

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