dilution

noun
di·​lu·​tion | \ dī-ˈlü-shən How to pronounce dilution (audio) , də- \

Definition of dilution

1 : the action of diluting : the state of being diluted
2 : something (such as a solution) that is diluted
3 : a lessening of real value (as of equity) by a decrease in relative worth specifically : a decrease of per share value of common stock by an increase in the total number of shares

Examples of dilution in a Sentence

Recent Examples on the Web In a typical diesel engine, these emissions are minimized by a technique called dilution, in which spent, low-oxygen combustion gases from the previous engine cycle are routed back into the air intake. Steven Ashley, Scientific American, "Can Diesel Finally Come Clean?," 19 Dec. 2019 The new dilution, meanwhile, didn’t scare off traders: Trillium shares once again charged higher on Thursday morning. Charley Grant, WSJ, "Stock Traders Fund Drug Development," 23 Jan. 2020 Although dilution and instructions vary for different types of surfaces, Forte says the payoff is fewer bottles in the cleaning closet. Lindsey M. Roberts, Washington Post, "There’s no one-for-all cleaning product, so here are a handful of top performers," 4 Dec. 2019 Serve very cold, but be careful not to keep ice in too long because of dilution. Gary Kamiya, SFChronicle.com, "How Pisco Punch, the Holy Grail of San Francisco drinks, was lost and found," 27 Dec. 2019 Not only is helium expensive, but dilution fridges are not cheap either. Chris Lee, Ars Technica, "Quantum computing’s also-rans and their fatal flaws," 30 Nov. 2019 That’s before counting the warrants, equivalent to 9 percent dilution on the pro forma share count, plus the redemption premium. Washington Post, "Chevron, Oxy, Anadarko and the Meaning of ‘Winning’," 20 Sep. 2019 Opponents and critics worried about the dilution of anticorruption laws that in the past few years led to the indictment of dozens of Cabinet members, lawmakers, and even a Romanian member of the European Parliament. BostonGlobe.com, "“I receive this victory with joy, thankfulness, modesty, and with faith in Romania,” said the 60-year-old former mayor of the city of Sibiu, a member of Romania’s ethnic German minority who was a high school physics teacher before entering politics.," 25 Nov. 2019 Some dilution of this water vapor signal will be inevitable once 5G gets fully underway, Eric Allaix, a meteorologist who chairs the World Meteorological Organization’s group on radio-frequency coordination, told The Verge. Paul Voosen, Science | AAAS, "New deal won’t prevent 5G communication networks from interfering with weather forecasts," 22 Nov. 2019

These 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.

See More

First Known Use of dilution

1646, in the meaning defined at sense 1

Keep scrolling for more

Learn More about dilution

Time Traveler for dilution

Time Traveler

The first known use of dilution was in 1646

See more words from the same year

Statistics for dilution

Last Updated

20 Feb 2020

Cite this Entry

“Dilution.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/dilution. Accessed 20 Feb. 2020.

Keep scrolling for more

More Definitions for dilution

dilution

noun

Financial Definition of dilution

What It Is

Dilution is a reduction in proportional ownership caused when a company issues additional shares.

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

noun
di·​lu·​tion | \ dī-ˈlü-shən How to pronounce dilution (audio) , də- \

Kids Definition of dilution

1 : the act of making thinner or more liquid : the state of being made thinner or more liquid
2 : something (as a solution) that has had something added to it to make it thinner or more liquid

dilution

noun
di·​lu·​tion | \ dī-ˈlü-shən, də- How to pronounce dilution (audio) \

Medical Definition of dilution

1 : the action of diluting : the state of being diluted
2 : something (as a solution) that is diluted

Keep scrolling for more

dilution

noun
di·​lu·​tion | \ dī-ˈlü-shən, də- How to pronounce dilution (audio) \

Legal Definition of dilution

1 : a lessening of real value (as of equity) by a decrease in relative worth specifically : a decrease of the value per share of common stock caused by an increase in the total number of shares
2 : a lessening of the value of a trademark that is caused by use of the mark by another and that creates potential confusion on the part of the consumer
3 : a weakening of the voting rights of a group of citizens (as a minority) because the representatives they elect have no greater legislative power than the representatives elected by smaller voting groups

Keep scrolling for more

More from Merriam-Webster on dilution

Rhyming Dictionary: Words that rhyme with dilution

Spanish Central: Translation of dilution

Nglish: Translation of dilution for Spanish Speakers

Britannica English: Translation of dilution for Arabic Speakers

Comments on dilution

What made you want to look up dilution? Please tell us where you read or heard it (including the quote, if possible).

WORD OF THE DAY

See Definitions and Examples »

Get Word of the Day daily email!

Test Your Vocabulary

More Confusing Words—Quiz

  • cats on impossible timber
  • The magician ______ moved the selected card to the top of the deck.
Spell It

Can you spell these 10 commonly misspelled words?

TAKE THE QUIZ
Bee Cubed

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ
Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!