Rocket Lab slammed after announcing share sale plans
When the market is throwing cheap cash at you, take it.
That’s essentially what Rocket Lab said it’s going to do by announcing an at-the-market share offering of up to $750 million in securities, hammering its stock price in early trading.
In an at-the-market offering, companies can sell shares directly into the market, effectively diluting existing shareholders, which explains the price move.
While the drop is likely painful for some shareholders who got into the stock only recently, selling shares is a pretty logical way for a company to, literally, capitalize on the market enthusiasm that has sent the stock up more than 600% over the last 12 months.
Rocket Lab said it intends to use the proceeds from the share sale for general corporate and working capital purposes. It also said it may use some of the money to pay the cash portion of the $75 million purchase price for German laser communications company Mynaric, a deal announced back in March, if that acquisition is finalized. (Mynaric was operating under the German version of bankruptcy protection at the time, making the acquisition somewhat complicated.)
“Pending these uses, we may invest the net proceeds from this offering in short-term, interest-bearing instruments. Accordingly, we will retain broad discretion over the use of these proceeds,” the company said.
In an at-the-market offering, companies can sell shares directly into the market, effectively diluting existing shareholders, which explains the price move.
While the drop is likely painful for some shareholders who got into the stock only recently, selling shares is a pretty logical way for a company to, literally, capitalize on the market enthusiasm that has sent the stock up more than 600% over the last 12 months.
Rocket Lab said it intends to use the proceeds from the share sale for general corporate and working capital purposes. It also said it may use some of the money to pay the cash portion of the $75 million purchase price for German laser communications company Mynaric, a deal announced back in March, if that acquisition is finalized. (Mynaric was operating under the German version of bankruptcy protection at the time, making the acquisition somewhat complicated.)
“Pending these uses, we may invest the net proceeds from this offering in short-term, interest-bearing instruments. Accordingly, we will retain broad discretion over the use of these proceeds,” the company said.
