Plug Power Shares Drop 7% After Company Announces Secondary Offering

Discussion in 'Stock Market Forum' started by PaulSchinider, Apr 24, 2014.

  1. PaulSchinider

    PaulSchinider Well-Known Member

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    Plug Power announced yesterday that it was preparing to offer an additional 15 million shares in a secondary offering underwritten by Morgan Stanley and Barclays Capital

    Plug Power Inc (PLUG) announced yesterday that it was planning to offer around 15 million additional shares through a secondary offering of common stock. In its S-3 filing with the Securities and Exchange Commission (SEC), the Latham, New York-based manufacturer of fuel cells said its latest offering will be underwritten by Morgan Stanley and Barclays, with Cowen and Company and FBR Capital Markets acting as co-managers. The company also said it would offer a 30-day option to its underwriters, allowing them to buy an additional 2.5 million shares in the company. As a result of the secondary offering, Plug Power’s total shares outstanding will reach 123.44 million. The price of the offering has been not yet been announced. Plug Power said that proceeds from the offering will be diverted to expanding production, but analysts expect the funds to be used to increase capital expenditures and acquisitions. This is not the first time Plug Power has initiated the sale of additional stock. On January 10, Plug Power’s stock price rose more than 10% after the company announced it had priced a secondary offering of 10 million common shares at $3 apiece.

     
  2. Peninha

    Peninha Senior Investor

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    I'm not surprised by this drop, if they are flooding the market with an additional 15 million shares their price is coming down of course.
     
  3. uggonen

    uggonen Well-Known Member

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    Nothing surprising in the drop. In Finland we had this mining company plummed from 0.4€/share to 0.08€/share when they doubled their shares. I think they will rise from the plummet, it might just take some time.
     
  4. Peninha

    Peninha Senior Investor

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    Sometimes it's just confusing to understand how the current shareholders deal with this flooding of the market, they are not happy, that is for sure.
     
  5. wanderingwildman

    wanderingwildman Well-Known Member

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    Although I don't like hardship on others, I must admit I am not disappointed. It should be common sense not to participate in this behavior. However, so many companies still do.
     
  6. JR Ewing

    JR Ewing Super Moderator Staff Member

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    If you believe in the company, their products or services, etc, these events can be a very good buying opportunity. ButI've said before here and elsewhere that this one is highly speculative - not something I'd put a significant % of my portfolio in. Much the same way these small biotech companies put everything into drug R&D, and small oil drillers put everything into finding the next "East Texas Oilfield" - sometimes it pays off big, other times it just wastes $ - up to the point of driving companies down into insolvency in some cases. A gamble, basically.
     
  7. Gelsemium

    Gelsemium Senior Investor

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    That's true, there is a big offer, the price comes down and you get to buy stocks at low price. If the company is good those stocks will go high and you'll make money.
     
  8. Peninha

    Peninha Senior Investor

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    That's the logic of the market, it just might be good for the buyer, but for the holders is not good because they see their capital decrease.
     
  9. Gelsemium

    Gelsemium Senior Investor

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    What do you mean shrew that the fundamentals are unsatisfactory? OK, just read the article, thanks for sharing!
     
  10. All_is_not_lost

    All_is_not_lost Guest

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    Basically correct. When investing you have to decide what the goal is. If you are trading, the fundamentals of the company become less important than the chart, beta, etc. If you are investing the fundamentals trump anything the chart says (though, imo, still wise to consult the chart for and entry or exit point). In the case of a company like PLUG, you can fairly easily assess the strength of the financial state, vis-a-vis their needs for growth/further investment. If they don't have a nice cash reserve and they are still growing/investing, there is a fair chance you will see equity dilution. You probably want to stay away from those companies if you are trading (or at least be aware of the situation). If investing, it's still important to analyze a decision like dilution, but it's a reasonable option if you believe the money raised will sufficiently grow the company.
     
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