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Overhang
Also called: share overhang, warrant overhang, fully diluted shares
Shares that could be added to the market from warrants, options, convertibles and unvested stock awards, which tends to weigh on the share price.
Explanation
The overhang is the gap between shares outstanding today and the fully diluted count: everything that can turn into stock. Warrants and options become shares when exercised, convertibles when converted, and restricted stock units when they vest. Shares registered for resale or coming off a lock-up add to the supply in a similar way.
Overhang matters most when it is in the money or close to it. Holders of warrants with a $2 exercise price are likely to exercise and sell if the stock climbs to $3, so heavy overhang near the current price tends to act as a ceiling.
Size it against the share count: an overhang of 10% is ordinary for a company that pays employees in stock; 100% or more means the share count could double.
Why it matters
The overhang is dilution that has already been agreed: it tells you how many more shares exist on paper before the company sells a single new one.
How Equity Dictionary measures it
The overhang factor (10% of the score) divides warrants, options, convertible shares and unvested RSUs by shares outstanding: 5% scores 5, 25% scores 45, 50% scores 70, 100% scores 90 and 150% scores 100. Components more than 15 months old are left out and noted. The Dilution tab lists each component in its overhang table.
Related terms
- Warrants: Contracts issued by a company that let the holder buy new shares at a fixed exercise price until an expiry date, often five years out.
- Pre-funded warrants: Warrants sold for almost the full share price up front, leaving a nominal exercise price such as $0.0001, used in place of shares for buyers near an ownership limit.
- Convertible notes: Debt that the holder can exchange for shares at a set conversion price, so a loan today can become dilution later.
- Dilution: The shrinking of each existing shareholder’s ownership stake when a company issues new shares.
- Dilution-risk score: Equity Dictionary’s 0–100 estimate of how much pressure a company is under to issue new stock, built from eight weighted factors.
Plain-English summary for research; not legal or investment advice.