Dilution is a normal course of a growing business. Can you name one company that has grown and has not had to issue more shares in the process ? The key is to grow the business at the same pace or faster than you issue shares. There is nothing wrong with more shares, every successful company in history has done it. Its the ones that issue shares and have no growth or even worse no real business or revenue. Company's raise money to grow their business one of two ways, debt or equity. Most times the debt is convertible into equity at some future date. It only hurts share holders if the money was not put to good use and the company does not grow by at least the amount invested hence creating no "dilution".
Company "A" has a net shareholder equity of $100,000 and and has 1,000 shares outstanding or net value of $100 per share
Company "B" has a net shareholder value of $100,000 and the same 1,000 shares outstanding, but raised another $100,000 and had to issue an additional 1,000 shares for that money. Their net shareholders equity is now $200,000 or $100 per share net value. NO Dilution
That is your finance lesson for this morning, it will be on the final ;)
