> Value is lost to existing shareholders who have the value of their shares diluted.

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.

Assuming all shares are equal in class, voting power is diluted.

I don't really care about how much of the balance sheet I could lay claim to during a liquidation. That's going to be pennies on the dollar, or nothing.

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.

That would very much depend on what you're buying stock in. Holding companies and investment companies are mostly valued to what your "share" of their holdings is worth. Real estate too.

You continue to make a 1:1 assumption. Dilution can cause the stock to go down because of FUD of financial health. It can go up because of strong leadership and optimistic futures. It's not occurring in a vacuum where $1 is 1 share and +$1 to company worth.

But raising money might also cause the stock to go up, right? More investment signals confidence and planned growth. More people may want to buy in.

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).

Yes but a company doing something that causes the market to value shares less isn’t dilution. The fact that you know how the market will respond to companies raising capital by issuing new shares doesn’t change the legality of it.