Dilution

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Dictionary Says

Definition of 'Dilution'

A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities.
Investopedia Says

Investopedia explains 'Dilution'

Adding to the number of shares outstanding reduces the value of holdings of existing shareholders.

Related Definitions

  • Anti-Dilution Provision

    A provision in an option or a convertible security. It protects an investor from dilution resulting from later issues of stock at a lower price than the investor originally paid. Also ...
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  • Diluted Earnings Per Share - Diluted EPS

    A performance metric used to gauge the quality of a company's earnings per share (EPS) if all convertible securities were exercised. Convertible securities refers to all outstanding ...
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  • Full Ratchet

    An anti-dilution provision that, for any shares of common stock sold by a company after the issuing of an option (or convertible security), applies the lowest sale price as being the ...
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    • Outstanding Shares

      Stock currently held by investors, including restricted shares owned by the company's officers and insiders, as well as those held by the public. Shares that have been repurchased by the ...
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    • Convertible Preferred Stock

      Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as ...
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    • Convertibles

      Securities, usually bonds or preferred shares, that can be converted into common stock. Convertibles are most often associated with convertible bonds, which allow bond holders to convert ...
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    • Employee Stock Option - ESO

      A stock option granted to specified employees of a company. ESOs carry the right, but not the obligation, to buy a certain amount of shares in the company at a predetermined price. An ...
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    • Secondary Offering

      1. The issuance of new stock for public sale from a company that has already made its initial public offering (IPO). Usually, these kinds of public offerings are made by companies ...
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    • Wash-Out Round

      A common round of financing to owners of small companies that are not yet financially stable. When such financing is done, the new issuance serves to dilute drastically the ownership of ...
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    • Open Offer

      A secondary market offering that is similar to a rights issue in which a shareholder is given the opportunity to purchase stock at a price that is lower than the current market price. ...
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