Why Perion Network Stock Tanked This Morning

What happened

Shares of Perion Network (NASDAQ:PERI) tanked as much as 11% this morning after the company announced the pricing of a secondary offering that it launched yesterday. As of 11:40 a.m. EST, the stock had started to recover and was down just 6%.

So what

Perion Network, which specializes in advertising technology, priced the deal at $11.50, which represents a meaningful discount to yesterday’s closing price of $13.96. The company announced the proposed $50 million offering yesterday, but the deal was upsized from that amount. Perion sold nearly 5 million shares at the offering price to raise $57.4 million in gross proceeds. Underwriters will have a 30-day option to purchase up to approximately 750,000 additional shares.

Red stock chart going down

Image source: Getty Images.

Separately, Perion also reported preliminary fourth-quarter results yesterday, with revenue expected to be $110 million to $115 million, ahead of the company’s guidance of $100 million to $105 million.

Now what

It’s not uncommon for companies to price secondary offerings at a discount to the market price in order to incentivize investors to purchase shares through the offering. This allows the company to raise capital without going to the open market.

As of Jan. 11, Perion had 27.35 million outstanding shares, according to the prospectus, so the offering represents over 18% dilution before factoring in the underwriter options. Perion says it intends to use the proceeds for general corporate purposes such as working capital and funding future growth.

READ:  These 3 Dividend ETFs Are a Retiree's Best Friends

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/01/20/why-perion-network-stock-tanked-this-morning/

Xem thêm bài viết thuộc chuyên mục: investing

Related Articles

Leave a Reply

Back to top button