dilution
noun
, də-\
Definition of dilution
Examples of dilution in a Sentence
Recent Examples on the Web
These companies are quick to enforce their own trademarks and copyrights via enforcement action, often citing brand dilution in suits and settlements. — Sangeeta Singh-kurtz, Quartzy, "Governments are taking cultural appropriation to court," 28 Aug. 2019 This does not represent a moderate dilution of the Taliban, as some of their speeches would like to suggest. — Nick Paton Walsh, CNN, "What a wedding massacre says about Trump's plan to leave Afghanistan," 19 Aug. 2019 Restaurateurs are willing to pay a premium for the cubes, which melt slowly, reducing dilution in boozy cocktails, because the crystal-clear ice has become a staple in craft cocktails. — Jess Fleming, Twin Cities, "You paid how much for one ice cube?!? St. Paul company cashing in on artisanal ice trend," 15 Aug. 2019 If the thought of drinking beer on ice horrifies you, lest the dilution degrade the integrity of the brew or whatever, know that I‘m talking about using the cheap stuff, not some hopped-up IPA or chocolaty stout. — Alison Roman, Bon Appétit, "If You Can Open a Cheap Beer, You Can Make This Cocktail," 12 July 2019 This was a dilution of the original target of carrying out watershed development work over 39 million hectares of land. — Aarefa Johari, Quartz India, "An investigation into how India dismantled its main defence against drought," 1 July 2019 The lawsuit, filed Friday against Horseshoe Hill as well as owner and founder Grady Spears, alleges trademark infringement, trademark dilution and unjust enrichment. — Marc Ramirez, Dallas News, "Tex-Mex restaurant sues Fort Worth rival for double-dipping on name of its famed queso," 28 June 2019 And there begins the gradual erasure & dilution of the kimono's rich cultural history for future generations. — Abby Gardner, Glamour, "Kim Kardashian's New Shapewear Brand Is Being Accused of Cultural Appropriation," 27 June 2019 Right here is the aforementioned meaning-drift, the dilution. — Spencer Kornhaber, The Atlantic, "Taylor Swift Seems to Think Homophobes Are ‘Throwing Shade’," 17 June 2019These example sentences are selected automatically from various online news sources to reflect current usage of the word 'dilution.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
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More Definitions for dilution
dilution
nounFinancial Definition of dilution
How It Works
Let's assume you own 100,000 shares of XYZ Company. The company has 1,000,000 shares outstanding, meaning that you own 10% of the company. Shares of XYZ Company are trading at $5, so the company's current market value is $5,000,000 and your investment is worth $500,000.
XYZ Company wants to build a new plant, so it issues 500,000 shares. Your 100,000 shares are now only 6.67% of the company (100,000/1,500,000 = 6.67%).
In the end, the dilution may be worth it if the plant makes XYZ Company more profitable. If however, the company issued those shares as part of an overly generous stock option program or to raise funds for projects that fail to contribute profit, the dilution may cause permanent damage to the value of your holding.
Why It Matters
Dilution is the act of dividing the proverbial pie into ever smaller pieces, and it is usually not well received by investors. Several events can cause dilution, particularly secondary offerings, the conversion of convertible securities, option exercises, and warrant exercises. On occasion, companies purchase their own shares on the open market to combat dilution. It is important to note stock splits do not usually create dilution, because in a stock split the investor receives additional shares to preserve his or her percentage ownership and investment value.
Although dilution most noticeably affects ownership percentages, earnings per share calculations also consider the effects of dilution. This is why most public companies report both basic and diluted earnings, whereby potentially dilutive securities are treated as if they were already converted to outstanding shares. This effectively increases the number of shares over which the company's earnings would be spread if all potentially dilutive securities were exercised.
In some companies, shareholders can protect themselves from dilution if they have the right to purchase shares in any of the company's future stock issuances. These anti-dilution provisions, also called subscription rights or preemptive rights, usually appear in a corporation's charter.
Source: Investing Answers
dilution
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Kids Definition of dilution
dilution
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Medical Definition of dilution
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dilution
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Legal Definition of dilution
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