Metric
Share Dilution
Change in share count over time, and whether existing owners are being diluted.
Formula
(Current Shares Outstanding − Prior Shares Outstanding) ÷ Prior Shares Outstanding
Definition
Share dilution tracks the growth or reduction in outstanding shares. Positive dilution shrinks each existing shareholder's slice of the company.
Why it matters
Buybacks (negative dilution) concentrate ownership; heavy dilution from stock-based comp or secondary offerings works against shareholders.
Building blocks
- Shares Outstanding
- Total number of shares currently held by all investors.
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