dilution

noun
di·​lu·​tion | \ dī-ˈlü-shən , 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

The company spent $343 million buying back shares in the fourth quarter, fully offsetting the dilution from scrip dividends issued in the preceding period. Kelly Gilblom, Bloomberg.com, "BP Dodges Oil-Industry Gloom as Profit Jumps With Production," 6 Feb. 2018 The rise of television and rival forms of narrative has taken much of the air out of the movie balloon, and so has the dilution of the filmgoing experience. Stephen Galloway, The Hollywood Reporter, "Cannes vs. Netflix: Why Everyone Lost With the Festival's Ban," 23 May 2018 Resulting dilutions often contain no remaining molecules of the original substance or very trace amounts. Beth Mole, Ars Technica, "Bogus homeopathy data published in top journal sparks outcry, facepalms," 10 Oct. 2018 On May 14, before Ms. Redstone caught wind of the plan, CBS filed a lawsuit attempting to block her from removing any board members before the CBS board could vote on the dilution measure. Joe Flint, WSJ, "Once Allies, Two Media Chiefs Go to War Over the Future of CBS," 28 May 2018 Another person said the company wants to limit dilution of shareholders. Julie Steinberg, WSJ, "Tencent-Backed Auto-Trading Startup Looks to Raise Capital," 10 Dec. 2018 Spirituous cocktails built in the glass, like the Old Fashioned, have the least dilution and so are the strongest. Anne Brockhoff, kansascity, "Low-alcohol, no-alcohol cocktails trending in KC | The Kansas City Star," 9 Jan. 2018 Some homeopaths believe that water molecules can have memories of the substance and that shaking the dilutions can increase their healing potency. Beth Mole, Ars Technica, "Bogus homeopathy data published in top journal sparks outcry, facepalms," 10 Oct. 2018 When using liquid fertilizers, always follow label instructions for proper dilution and application methods. The Editors Of Organic Life, Good Housekeeping, "Everything You Need To Know About Organic Fertilizer," 10 Mar. 2017

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.

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First Known Use of dilution

1646, in the meaning defined at sense 1

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Dictionary Entries near dilution

dilutant

dilute

dilutee

dilution

diluvial

diluvialist

diluvianism

Statistics for dilution

Last Updated

20 Feb 2019

Look-up Popularity

Time Traveler for dilution

The first known use of dilution was in 1646

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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 , 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- \

Medical Definition of dilution

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

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dilution

noun
di·​lu·​tion | \ dī-ˈlü-shən, də- \

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

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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

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