How does stock dilution hurt investors? Simply put: the company issues new shares → your ownership percentage decreases → EPS( falls → the stock price may follow suit.

The core mechanisms are as follows:

**Ownership is diluted**: Originally, 100 shares accounted for 1% of the company, but now it has changed to 0.5%, which naturally reduces the influence in the company's decision-making.

**EPS fall**: The total amount of dividends remains unchanged, but more shareholders are included, resulting in less money per share. Most stock price valuations are linked to EPS, so this round of operations directly crashes the market.

**Dividend Shrinkage**: Steady investors who rely on dividends are the most affected - the yield is directly impacted.

**Stock Price Downward Spiral**: A large influx of new stocks → Investor confidence shaken → Increased difficulty in financing → Stock price continues to bottom out

Of course, the company has reasons to do this—financing for expansion, mergers and acquisitions, repaying debts. The question is to ensure that the money is well spent.

There are three types of protective measures: **ratchet clauses** (automatically protect when the price of the next round of financing is lower), **weighted average anti-dilution** (adjusted based on the average issuance price of new shares), and **full ratchet** (the strongest protection, fully adjusted based on the new share price).

**Bottom line**: Before investing, you must clearly understand the dilution risks, especially for startups and financing stage tickets. EPS, equity ratio, and financing plan are all essential.