Sold at a loss...compared to what basis? From who's point of view?
As long as the shares already existed...i.e. they were sold by one person and bought by another...that's not dilution. If the guy that sold had a higher cost basis, then he lost money. The company didn't make or lose anything in the transaction.
I think you're asking a serious question, so:
Dilution is:
- Company A has 100,000 shares of stock outstanding
- Company A need something (Cash, purchase another company, buy a piece of land)
- Another entity wants to supply that need
- Company A says "I'll issue you 10,000 NEW shares of stock in return for (whatever it is that is needed)
- Company A gets the (cash), the other entity gets the stock and sells it on the open market, resulting in 110,000 shares of stock outstanding
- Result...all existing shareholders were diluted by 10%. Of course, they also now have the (Cash, land, other company, whatever).
