Let us understand stock dilution and examine the pros and cons of stock dilution and why it is something to worry about.

1. Stock Dilution
Stock dilution is a decline in the percentage of
share ownership by investors owning a
particular stock, primarily due to the company
issuing new shares of stock, which “dilutes” the
value of existing stock held by shareholders

2. Pros Of Stock Dilution
Sign of growth
Decrease external
ownership
Increase the
company valuation
External shareholders
always get benefits

3. Cons Of Stock Dilution
Dire financial health
Decrease the stock
value
Transfer of ownership to
internal shareholders
Reduces the ownership
of shareholders