What does it mean when share deluted

Share dilution occurs when a company issues additional shares of stock, which reduces the ownership percentage of existing shareholders. This is typically done to raise capital for growth opportunities or to service existing debt. Here are some key points to understand about share dilution:

1. Impact on Ownership: Share dilution reduces the ownership percentage of each existing shareholder. For example, if a company issues new shares, the ownership of each shareholder is reduced proportionally.
2. Impact on Control: If dilution leads to a significant decrease in the percentage of ownership, it can also lead to a loss of control over the company's decision-making. This is because the new shares are typically issued to investors who have a different vision or strategy for the company.
3. Impact on Value: The value of existing shares can be affected by dilution. If the company is issuing new shares to raise capital for growth, the market may view this positively and the value of existing shares may increase. However, if the market perceives that dilution is being used to offset poor performance or to buy out small shareholders, the value of existing shares may decrease.
4. Types of Dilution: There are two main types of dilution: primary and secondary. Primary dilution occurs when a company issues new shares to raise capital, while secondary dilution occurs when existing shareholders sell their shares to new investors.
5. Risks: Share dilution can lead to a decrease in the value of an investor's shares and can make them less valuable. It can also lead to a loss of control over the company's decision-making, which may not align with the investor's vision for the company's future.

In summary, share dilution occurs when a company issues new shares, which reduces the ownership percentage of existing shareholders. This can lead to a loss of control over the company and can affect the value of existing shares. Investors should consider the reasons behind dilution and the potential impact on the company's future performance and value.