CytRx Corporation (NASDAQ: CYTR) is having an overwhelmingly rough day in the market today after the comapny announced that it will be moving forward with a registered direct offering. Of course, these offerings lead to dilution, which is causing fear among investors and sending the stock spiraling downward. Today, we’ll talk about:
- The offering;
- what we’re seeing from CYTR;
- and why this may be an opportunity in the making.
CYTR Announces Direct Offering
As mentioned above, CytRx Corporation is having an incredibly rough start to the trading session this morning after the company announced an offering. In a press release issued early this morning, the company said it has entered into a definitive purchase agreement with institutional investors to sell 5,600,000 shares of its common stock in a registered direct offering. The shares will be sold at a price of $1.25 each, bringing gross proceeds in the amount of $7 million. In the release, CYTR said that the offering is expected to close on or about May 15, 2018 and is subject to customary closing conditions.
CYTR announced that once fees are deducted, it is expecting to generate $6.5 million from the offering. These proceeds will be used for general corporate purposes, working capital, and possibly new drug discovery activities and acquisitions or mergers.
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 this particular case, the news proved to be concerning. After all, dilutive offerings take value from current shareholders. So, it’s no surprise to see that the stock is spiraling downward in the market today. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (10:53), CYTR is trading at $1.29 per share after a loss of $0.58 per share or 31.02% 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 CYTR. In particular, we’re interested in following the story surrounding the use of the funds from the offering. Also, this could prove to be a great opportunity. As Warren Buffet said, the best time to buy is when the fear is high. While fear is high thanks to the offering, the company has impressive candidates. As a result, we could be seeing the bottom as we speak, representing an opportunity to get in on strong future gains at a discount. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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