Diluted shares refer to the increase in the number of outstanding shares of a company due to the issuance of new equity, which can have a dilutive effect on the ownership percentage of existing shareholders. This can occur through various means such as primary market offerings, employee stock options, or conversion of convertible bonds and preferred shares into stock. Dilution can impact fundamental aspects of a stock, including ownership percentage, voting control, earnings per share, and the value of individual shares
. Fully diluted shares represent the total number of shares that will be outstanding after all possible sources of conversion are exercised, such as convertible bonds and employee stock options
. Dilution can reduce the value of existing investors' shares and their proportional ownership of the company, which is a risk that shareholders must be aware of
. Fully diluted shares outstanding is the total number of shares a company would have if all dilutive securities were exercised and converted into shares, including options, warrants, and convertible debt
. Equity dilution occurs when a company issues new shares, leading to a decrease in equity ownership for existing shareholders
