Stock dilution

An issue of additional shares in a company to attract more investment in the public market. This may lead into certain dilution in stakes of the current investors. By bringing new shareholders into the market, current stock owners may experience certain decrease in voting powers and likely stock price fluctuation.


  • company gets more investment from different sources
  • may create more competitive stock market
  • may create additional demand for a company


  • may indicate 'a company in a trouble', incapable of finding finances the other ways
  • current shareholders (especially in preferred stock) lose % of their ownership stakes proportionally to the amount of the new shares issued
  • stock may fall in price due to oversupply
  • may create lesser demand for a company
  • may have a negative, psychological impact on some investors

Dilution is broader, compared to the stock split.