Financials
Dilution
A reduction in existing shareholders ownership percentage or per-share claim caused by more shares or share equivalents.
What it means
Dilution can come from stock compensation, option exercises, convertible securities, acquisitions paid in stock, or other issuance. Diluted share count helps readers inspect potential per-share effects.
Example
If shares outstanding rise while total earnings stay flat, earnings per share can decline.
What not to infer
Dilution is not automatically harmful without considering what the company received or funded through issuance.