Dilution

Dilution happens when a company issues new shares of stock, which spreads ownership across more shares—so your slice of the pie gets smaller, even if the pie stays the same size. You'll run into this when companies raise money by selling new stock or when they hand out stock options to employees. It matters because dilution can reduce your earnings per share (the company's profit divided by total shares), which can hurt your investment returns. For example, if TechCorp has 100 million shares outstanding and issues 20 million new ones, existing shareholders now own a smaller percentage of the company. It's not always bad—the money raised might fund growth—but it's worth tracking.