Learn · Explainer
Basic vs. diluted shares
The two share counts behind earnings per share, what makes up the difference, and the gap at each company.
The short answer
Basic shares are the average number of common shares outstanding during the period. Diluted shares add the shares that stock options, restricted stock units and convertible securities could turn into. Each gives its own earnings per share, and diluted EPS is the headline figure. Across the 96 companies here, diluted shares are a median 0.5% above basic; at Apple the gap is 0.4%.
Two counts, two EPS figures
Basic EPS = net income ÷ weighted average basic shares
Diluted EPS = net income ÷ weighted average diluted shares
Both counts are weighted averages over the year, so a share bought back in the last month counts for only a twelfth. Apple's basic average for fiscal 2026 was 14.66B and its diluted average 14.72B. Earnings per share covers the calculation, and the EPS note in every 10-K reconciles the two counts.
Source: Apple 10-K for fiscal 2026, filed Nov 3, 2026
What goes into dilution
- Unvested restricted stock units that are expected to deliver shares, the largest piece at most large companies. Stock-based compensation covers them.
- Stock options that are in the money. The treasury stock method assumes the exercise proceeds buy back shares, so only the net new shares count.
- Convertible bonds and preferred stock, if converting them would lower EPS.
- Nothing that would raise EPS. Securities that would increase earnings per share, or reduce a loss per share, are left out as anti-dilutive. That's why a company with a loss reports the same basic and diluted counts.
How big the gap is
Usually small: 3 of the 96 companies here show almost no gap, and the largest is Tesla's, at 9.4%. A big gap usually means heavy use of stock pay or convertible debt. Neither count is the cover-page share count, which is a single day's figure used for market cap.
Every company
Weighted average share counts for the latest fiscal year from each income statement, sorted by the gap. Companies that reported a loss show no gap, since adding shares would make the loss per share smaller.
Common questions
What is the difference between basic and diluted shares?
Basic shares are the weighted average of shares actually outstanding. Diluted shares add shares that options, restricted stock units and convertible securities could create.
Why is diluted EPS lower than basic EPS?
Because the same net income is divided by a larger share count. When a company has a loss, the two are the same, since extra shares would make the loss per share smaller.
Which EPS is the headline figure?
Diluted EPS. It's the more conservative of the two and the one companies and analysts usually quote.
What is the treasury stock method?
The way options are counted in diluted shares: it assumes the cash paid to exercise them is used to buy back shares at the average price, so only the net increase is added.
Are diluted shares the same as shares outstanding?
No. Shares outstanding on the 10-K cover is a count on one date. Basic and diluted shares are averages over the reporting period.
Disclosures
- Editor holdings
- The editor holds shares of Tesla (TSLA) and SpaceX in a long-term retirement account. The editor holds no position in any other company named on this page. As of Nov 11, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Nov 9, 2026
General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.
More in Learn and Tools · Methodology & Disclosures explains where every number comes from.