“Dilutive securities are any financial instruments that can
potentially increase the number of shares outstanding” there are
several types of dilutive securities, including options, warrants,
convertible bonds, and convertible preferred stock (Accounting
Tools, 2022). “Antidilutive is a term that describes the effects of
certain actions, such as securities retirement, securities conversion,
or other corporate actions (e.g., acquisitions made through the
issuance of common stock or other securities) on the earnings per
share (EPS) or voting power of existing shareholders” (Hayes, 2021).
When becoming a shareholder in a company it is good to know
both terms and to know what they entail. When a shareholder invests
in a company, they should know how much they own in the company.
For example, with dilutive securities, if you own 10% of a company,
but the company decides that it needs to dilute shares, then the
actual stake you hold in the company is now at a smaller percentage.
With antidilutive securities, the company would need to offer its
shareholders the ability to purchase more shares so that they can
maintain that 10% ownership in the company (Hayes, 2021).
References
Accounting Tools. (2022, Mar 24). Dilutive Securities Definition.
https://www.accountingtools.com/articles/dilutive-
securities#:~:text=Dilutive%20securities%20are%20any%20fin
ancial,a%20share%20of%20common%20stock.
Hayes, A. (2021, Jul 30). Antidilutive. Investopedia.
https://www.investopedia.com/terms/a/antidilutive.asp
