Dilution

Each share's slice shrinking as more shares appear

In detail

When a share issue or the exercise of options increases the count, the same profit spreads over more shares and earnings per share falls. Ownership percentages fall too, so it usually costs existing holders. If the money raised earns more than that, the loss is made back in time.

Example

Going from 10 million to 12 million shares cuts earnings per share by about 17%.

Related terms

Shares outstanding Stock option Capital increase

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For learning, not investment advice. Decisions are your own.