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Dilution-risk score
Also called: dilution score, risk score, screening score
Equity Dictionary’s 0–100 estimate of how much pressure a company is under to issue new stock, built from eight weighted factors.
Explanation
The score combines the evidence a careful analyst would check: months of cash left (25% of the weight), past share growth (15%), recent financing activity (15%), distress such as going-concern language (15%), shelf and registration readiness (10%), overhang from warrants and convertibles (10%), listing compliance (5%) and how much the company already relies on selling stock (5%).
Each factor maps a metric to 0–100 through fixed anchor points, and the weights are re-normalized over the factors that have data. Floors apply in the clearest cases: a recent bankruptcy filing sets at least 85, going-concern language with under six months of cash at least 75, and under three months of cash at least 70. Below 20 reads Low, then Moderate, Elevated and High, and 80 or more Severe.
The screener uses a three-factor cut that every filer can get from SEC frames (runway 45%, share growth 35%, cash relative to float 20%), so screener and company-page scores differ by design. The score is a screening heuristic, not a forecast of the share price.
Why it matters
Dilution risk is spread across filings, financial statements and market data. One explainable number, with each factor’s evidence a click away, makes thousands of companies comparable.
How Equity Dictionary measures it
Every company page shows the score, its level, a headline naming the largest contributors, each factor’s evidence and a confidence level that falls when key inputs are missing or stale. The Validation page tests whether high scores were in fact followed by dilution.
Related terms
- Dilution: The shrinking of each existing shareholder’s ownership stake when a company issues new shares.
- Cash runway: How many months a company can keep operating on the cash it has, at its current burn rate, before it must raise more.
- Going concern: An accounting warning that a company may not be able to keep operating and paying its bills over the next year without raising money or restructuring.
- Overhang: Shares that could be added to the market from warrants, options, convertibles and unvested stock awards, which tends to weigh on the share price.
- Shelf registration: A registration statement, usually on Form S-3 or F-3, that pre-registers securities so a company can sell them later without a new SEC review each time.
Plain-English summary for research; not legal or investment advice.