Stock-based compensation

An operating expense that costs no cash and dilutes you anyway.

• Accounting
• Valuation

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  Stock-based compensation is an operating expense that costs no cash and dilutes you anyway

  Treat stock compensation as a cost of doing business; either deduct it from cash flow or count the dilution, and never ignore it twice.

  Any technology company valuation, any adjusted EBITDA reconciliation, and the interview question about non-cash charges.

  From Session 5: Accounting Inconsistencies · Aswath Damodaran (NYU Stern)