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Dilution

When a company issues new shares, each existing share owns a smaller slice of the company and its profits.

Simple example

You own 1 of a company's 4 shares, so you own 25%. If the company issues a fifth share, your 1 share is now 20% of the company, even though you didn't sell anything.

4 shares: yours is 25%5 shares: yours is 20%
Made-up numbers, for illustration only.

Related terms

Share buybacksA company buying back its own shares.Stock-based compensationPay in shares instead of cash.Earnings per share (EPS)Net income divided by the number of shares.