Why Velo3D Stock Is Tumbling Thursday
Portfolio Pulse from Adam Eckert
Velo3D Inc (NYSE:VLD) stock price fell after announcing a registered direct offering of 36 million shares and warrants at $0.50 per share. The warrants are exercisable at $0.565 and expire in five years. The company expects to raise $18 million for working capital, capital expenditures, and general corporate purposes. The offering is expected to close on December 29. Concurrently, Velo3D amended the note for its senior secured notes due 2026. CEO Brad Kreger highlighted strategies to improve cash flow, profitability, and new business pipeline for 2024.
December 28, 2023 | 2:37 pm
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Velo3D's stock price decreased due to the dilutive effect of a new share and warrant offering at a price below current market value, aimed at raising capital for the company's operations.
The announcement of a registered direct offering typically leads to a dilution of existing shares, which can cause a short-term decline in stock price. The offering price being set below the current market price further pressures the stock. The proceeds are intended for general corporate purposes, which indicates a need for capital but does not immediately translate into growth, thus the negative short-term impact.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 100