If a company sells 100,000 shares at a dollar each, the company is now worth $100,000 more because they now have another $100,000 on their balance sheet. No value is lost in this process.

> This is why a stock will tank when a company talks about diluting their existing shares by creating new shares out of thin air.

Companies can't just declare that more shares exist and dilute away shareholders like you said. They either issue them as stock based compensation, which is an expense, or they sell the shares to buyers, which means money goes toward their bottom line.

You're confusing percentage dilution with absolute diluation.

The shares represent the value of the company. The value of the company has increased by the amount of money raised. Each share represents a lower percentage of the company, but this is offset by the fact that the value of the company has increased by the amount of money raised. The shares have not been diluted on an absolute value scale.

Owning 10% of a company worth $1mm is the same value as owning 5% of a company worth $2mm.

If you own 10% of a $1mm company that raises another $1mm by selling more shares, you now own 5% of a 2mm company. Your percentage ownership is diluted, but your value has not been stolen.

This is basic pre- and post-investment math. Shareholders are diluted on a percentage basis, but not on an absolute basis.

I care how much of future profits will be returned to be, which does depends on the percentage I end up owning. A round needs to enable a bigger gain than the fraction it dilutes everyone.

Issuing new shares is not always a good move and sometimes it might cause investors to lose money and percentage ownership, but sometimes it might be a good move and result in investors gaining money (though still getting their ownership diluted).