mosyMoSys Inc. (NASDAQ: MOSY) is having an incredibly rough day in the market today, and for good reason. The company announced a transaction that will lead to serious dilution. Of course, the news upset investors, sending the stock tumbling down. Today, we’ll talk about:
- The transaction;
- what we’re seeing from MOSY as a result; and
- what we’ll be watching for ahead.
MOSY Tumbles On Offering News
As mentioned above, MoSys is haivng an incredibly rough start to the trading session this morning after announcing the pricing of a public offering. In a press release issued just before the market opened, the company announced a public offering that is expected to bring $11.1 million in gross proceeds through the door. Of course, the company will have to pay fees out of this total.
Nonetheless, MOSY said that the securities offered by the company include a combined total of 36.9 million units. There will be two different types of units available. The first type will be one share of common stock and one warrant to purchase one share of common stock at a price of $0.30 per unit. The second will consist of one pre-funded warrant to purchase one share of common stock and one warrant to purchase one share of common stock. The second unit price is also $0.30. Also, the warrants have an exercise price of $0.30 and will be exercisable upon issuance and will expire 5 years from issuance.
In the release, MOSY said that it expects for the offering to close on or about October 4, 2018. Net proceeds from the offering are expected to come to a total of $2.8 million. The costs include repayment of $7.4 million in debt and payment of placement and agent fees as well as other general offering expenses.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In the case of MoSys, the news proved to be overwhelmingly negative. After all, the offering is a transaction that will lead to serious dilution. Sure, debt is being paid off, but it’s an immediate reduction and the value of shares currently issued. So, it comes as no surprise that upset investors are sending the stock tumbling down. Of course, our partners at Trade Ideas were the first to alert us to the declines. At the moment (10:37), MOSY is trading at $0.26 per share after a loss of $0.32 per share or 54.70% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on MOSY. In particular, we’re interested in following the story surrounding the offering and what the company does with the funds raised. Although, after expenses, there’s not going to be very much to work with. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks.
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