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

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 Parent company National Amusement fired back by changing CBS bylaws to prevent a potential dilution of its voting stock. NBC News, "Heated battle over CBS and Viacom got physical, says Redstone," 29 May 2018 But even in those cases, as Justice Elena Kagan pointed out, the court has accepted state-level evidence of vote dilution. Barry C. Burden, Washington Post, "The Supreme Court decided not to decide Wisconsin’s gerrymandering case. But here’s why it will be back.," 19 June 2018 That’s because National Amusements had a day earlier amended CBS’s bylaws to say the dilution of voting power could only take place with 90% of board members’ approval. Alan Murray, Fortune, "China Tactics, CBS Control, PayPal and iZettle: CEO Daily for May 18, 2018," 18 May 2018 The AfD’s rise also threatens the CSU’s longtime majority in Bavaria, potentially forcing the latter into a coalition with a centrist partner that could lead to a further dilution of the CSU’s conservative profile. Philipp Adorf, Washington Post, "Angela Merkel’s governing alliance is increasingly frayed. Here’s why.," 3 July 2018 Even one of the most unapologetically confrontational feminist achievements of the 90s, the Riot Grrrl movement, ends with the dilution of its core message. Rhaina Cohen, The New Republic, "What the 1990s Got Wrong," 29 June 2018 The court has explained that vote dilution occurs when mapmakers limit a minority group’s ability to translate its voting strength into voting power, drawing district lines to ensure that white voters can select its preferred candidate. Anne Branigin, The Root, "Supreme Court Punts on Partisan Gerrymandering as Neil Gorsuch and Clarence Thomas Set Sights on Dismantling Voting Rights Act," 25 June 2018 Issuing new equity typically leads to dilution for existing shareholders—but not Musk. Dana Hull, Bloomberg.com, "Tesla Doesn’t Burn Fuel, It Burns Cash," 30 Apr. 2018

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

18 Sep 2018

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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