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How to Read the Dilution Pressure Score: Score, Max Measured and Risk Levels
The seven components of Signal8's Dilution Pressure Score, why it reads as points out of points measured, and how the risk levels and lower bounds work.
6 min readLast verified
The short version
The Dilution Pressure Score is a 0 to 100 measure, shown on a covered company's Dilution tab, of how much near-term pressure there is for the share count to grow. It adds up points from seven components, each built from figures read out of the company's SEC filings.
The score is always shown as points out of the points that could be measured, for example 58/85, not 58 out of 100. When an input is missing, that component is dropped from both the score and the maximum instead of being counted as zero. Beside the score, Signal8 shows five risk levels (Overall, Offering Ability, Overhead Supply, Historical and Cash Need), each Low, Medium or High.
The seven components
| Component | Max points | What it measures |
|---|---|---|
| Warrants ITM | 20 | How many warrants are in the money, and how many shares they represent |
| Convertible Proximity | 15 | How close conversion prices are to the stock price |
| Shelf Capacity | 15 | Drawable shelf capacity relative to market cap |
| ATM / Equity Line Capacity | 15 | Remaining ATM and equity line capacity relative to market cap |
| Toxic Financing | 15 | Adverse financing terms found in the documents |
| Cash Burn Urgency | 10 | Months of cash runway left |
| Historical Dilution | 10 | How fast the share count has grown |
The maximums add up to 100.
How each is scored
- Warrants ITM blends the share of priced warrants that are in the money with the in-the-money shares as a fraction of shares outstanding, reaching full weight at 30% of shares outstanding. Warrants whose exercise price is not disclosed are described but not scored. This is the warrant overhang that is already exercisable at a profit.
- Convertible Proximity weights each convertible by principal. A conversion price at or below the stock price scores fully, falling to zero at twice the stock price. Floorless and variable-price notes count as fully in range.
- Shelf Capacity scores zero when drawable capacity is 5% of market cap or less and full at 50% or more, after applying the baby shelf limit where it applies.
- ATM / Equity Line Capacity scores full when remaining ATM plus equity-line capacity reaches 30% of market cap.
- Toxic Financing adds points for specific terms: variable or VWAP-based pricing, price resets, anti-dilution protection without a floor (a ratchet), and deep discounts on private placements, capped at 15. The label refers to the deal structure, not to any named firm.
- Cash Burn Urgency scores 10 for under 3 months of runway, 7 for under 6, 4 for under 12, and 0 above that or when the company reports positive cash flow.
- Historical Dilution scores 10 for compound share growth above 50%, then 7, 4 and 2 at 25%, 10% and 5%.
Why it reads as score over max measured
Each component needs inputs, such as a current share price, a market cap, or a size for every instrument in its family. When an input is missing, the component is marked not measured and removed from the denominator as well as the numerator.
Rescaling that to 56 out of 100 would assume the missing component scored at the same rate as the others; counting it as zero would understate the pressure. Both would be inventing a measurement. The 48/85 form states exactly what was measured.
If fewer than 70 of the 100 points can be measured, there is no score at all. The widget shows a dash and a sentence explaining why, for example that no dilution snapshot has been generated yet. That is an absence of measurement, not a score of zero and not a low-risk finding.
The risk levels
The levels are separate from the points. Each is Low, Medium or High:
| Level | Driven by | Medium at | High at |
|---|---|---|---|
| Offering Ability | Shelf, equity-line and registered capacity vs market cap | Above 15% | Above 50%, or a live ATM or equity line |
| Overhead Supply | Potential dilutive shares vs shares outstanding | Above 10% | Above 30% |
| Historical | Share-count growth | Above 5% | Above 20% |
| Cash Need | Months of runway | Under 12 | Under 3 |
Cash Need can also be raised by a convertible maturing within 12 months, and a going-concern statement sets a floor of Medium.
Overall averages the four on a 1 to 3 scale, with two adjustments: any single High makes Overall at least Medium, and three or more Highs make it High. Low is deliberately not colored green on the page, because a low reading is relative, not a clearance.
Lower bounds
Sometimes the snapshot contains a live instrument whose size could not be determined. Its shares cannot be added to the totals, so Overall and Overhead Supply can only be floors. The page shows these muted with a "≥" sign, for example "≥ Medium", and hover text explaining that the level is at least this high because some instruments could not be measured. Read "≥ Medium" as "Medium or higher", never as Medium.
When no snapshot exists, the levels are not shown at all. A level that could not be computed reads Not measured, Not rated or, for Overall, Not assessed.
Where you see the score
- On the company page's Dilution tab, in the Dilution Pressure card, with each component's points, a bar and the filing evidence behind it.
- As a compact Dilution bar in the company page header.
- In the Terminal's Dilution tab, as the Pressure score row.
- In the Dilution column of the Premarket board in the screeners hub, for Pro accounts.
The full Dilution Pressure card, with component points and filing evidence, is part of the Signal8 Pro dilution snapshot. Visitors without Pro see the card locked, with an upgrade badge in place of the values.
How to check a company on Signal8
- Open a company's Dilution tab. Large caps such as this one are usually out of scope, and the tab says so.
- Compare overhang across covered companies on the dilution screener.
- Developers can read the same fields (
score,scoreMaxMeasured,scoreUnmeasuredComponents,levelsAreLowerBound) through the API or theget_dilution_riskMCP tool.
FAQ
Why does the Dilution Pressure Score show 58/85 instead of a score out of 100?
Because one or more components could not be measured, usually because a price, a market cap or an instrument's size was missing. Those components are removed from both the score and the maximum. Showing 58 out of 85 states exactly what was measured; rescaling to 100 or treating the missing part as zero would both invent a figure.
What does a dash instead of a dilution score mean?
It means there is no score. Either no dilution snapshot exists for the company, or fewer than 70 of the 100 points could be measured. A dash is an absence of measurement. It is not a score of zero and it says nothing about whether the company is likely to issue shares.
What does "≥ Medium" mean on the risk levels?
It is a lower bound. The snapshot contains at least one outstanding instrument whose size could not be measured, so its shares are missing from the total. The true level is Medium or higher. Signal8 shows the floor rather than a level that could understate the risk.
Does a high Dilution Pressure Score predict a falling share price?
No. The score summarizes the capacity and terms already disclosed in filings, such as in-the-money warrants, shelf room and cash runway. It does not forecast prices or say when a company will raise money. Companies with high scores sometimes do not issue shares for long periods, and companies with low scores can raise at any time.
Terms in this guide
- Shelf registration
- A registration statement, usually on Form S-3, that registers securities now so the company can sell them later in one or more offerings without filing a new registration each time.
- At-the-market (ATM) offering
- A program that lets a company sell newly issued shares directly into the open market at prevailing prices, a little at a time, through a sales agent.
- Equity line of credit (ELOC)
- An agreement under which an investor commits to buy a company's newly issued shares over time, at the company's request, at a price set by a formula tied to recent trading.
- Baby shelf rule
- The Form S-3 limit (General Instruction I.B.6) that caps companies with under $75 million of public float at selling one-third of that float in primary offerings in any 12 months.
- Warrant overhang
- The block of shares that could be created if a company's outstanding warrants are exercised. It is potential dilution that does not yet appear in the shares outstanding figure.
- Floorless convertible
- A convertible note or preferred stock whose conversion price can fall with the market price without any minimum, so a lower stock price means more shares on conversion.
- Variable-price conversion
- A conversion feature where the price at which a note or preferred converts into common stock is reset to a formula based on recent trading prices, often at a discount.
- Ratchet (price reset provision)
- A clause that lowers a warrant's exercise price or a convertible's conversion price if the company later issues stock at a lower price, or if the stock trades below a set level.
- Cash runway
- An estimate of how many months a company's cash could fund its operations at its recent rate of cash burn, before any new financing.
- Going concern warning
- A disclosure that there is substantial doubt about a company's ability to continue operating and meet its obligations for one year after its financial statements are issued.
- Toxic financing
- Market slang for financing structures, such as floorless or variable-price convertibles and aggressive price resets, whose share issuance grows as the stock price falls.
Put it to work
Try it on Signal8
See this in live data with Company research pages.
Also useful: Dilution screener · Signal8 Pro
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Educational content only. Signal8 is not a broker-dealer or investment adviser, and nothing here is a recommendation to buy or sell any security.