Stock dilution

Stock dilution is a general term that results from the issue of additional common shares by a company. This increase in common shares of a stock can result from a secondary market offering, employees exercising stock options, or by conversion of convertible bonds, preferred shares or warrants into stocks. This dilution can shift fundamental positions of the stock such as ownership percentage, voting control, earnings-per-share, value of individual shares. A broader definition specifies dilution as any event that reduces an investor's stock price below the initial purchase price.
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