A clean quantitative framing is this: stock-based compensation is a real cost even though many investors treat it as a non-cash footnote. Mechanism: SBC dilutes existing shareholders. Excluding it from adjusted earnings makes profitability look better than the economic reality. Over time, heavy SBC can transfer significant ownership value away from shareholders even while the headline business grows. Market translation: A tech company reporting "adjusted" EPS well above GAAP EPS may be hiding 5-10% annual dilution that quietly eats into per-share value. Failure mode: The mistake is accepting adjusted earnings as the real story without adding back the dilution cost to your ownership math. Review question: Ask whether the market is mispricing the mechanism or simply narrating it loudly. The point is not to memorize the label. The point is to know what variable is actually doing the work.