Fully Diluted Shares

When a company is mature, it often has more than just its primary shares outstanding.

• Employees have stock options that could convert into shares if they are exercised.
• The company may have debt that carries warrants that convert into shares if the debt isn't paid off by a given date.
• There could be business deals that carry options as part of the compensation given to the buyer.

Each of these adds to the total number of shares outstanding—usually without making the total value of the company any different. So we have a pie which then has more slices taken out of it—so the fully diluted number of shares of a given company, then, if counted, often puts a lower value per share on the total shares of the company as primary owners have been "diluted" by all of the other forms of shares converting back into primary.