Dilution
MarketsDefinition
Reduction in existing shareholders' ownership percentage caused by issuing new shares. Sources: stock-based compensation, secondary offerings, M&A stock deals, convertible bond conversions.
Tech companies routinely dilute 1-3%/year via SBC. Aggressive issuers (Tesla pre-2023, biotech) can dilute 10%+/year. Dilution mathematically reduces EPS and per-share value unless offset by proportional growth.
Tech companies routinely dilute 1-3%/year via SBC. Aggressive issuers (Tesla pre-2023, biotech) can dilute 10%+/year. Dilution mathematically reduces EPS and per-share value unless offset by proportional growth.