Stock-based compensation is a real cost even though many investors treat it as a non-cash footnote. Three quick checks before you act: 1. Name the mechanism in plain English: SBC dilutes existing shareholders. Excluding it from adjusted earnings makes profitability look better than the economic reality. 2. Say why it matters for behavior or portfolio decisions: Over time, heavy SBC can transfer significant ownership value away from shareholders even while the headline business grows. 3. Set the review question: Write down the state variable you would monitor first if this thesis started to drift. 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. A lot of confusion disappears once you separate the headline from the mechanism.