Inovio Pharmaceuticals Inc (NASDAQ: INO)
Inovio Pharmaceuticals stock fell in a big way yesterday; and in all honesty, it happened for good reason. The company announced the details of a secondary offer that would send 9,500,000 more shares into the public world. As a result, investors became concerned about dilution and a sell off ensued. However, today, it seems as though the stock is starting to see gains. Has it hit the floor? Here’s what I think…
Share Dilution Can Be Nasty
Share dilution is not uncommon in the stock market. It happens all the time actually. Here’s what happens….
- Investors pay X amount of money per share.
- The company decides it needs more money; so, it issues new shares to cover expenses.
- Because more shares are issued, each piece of the pie becomes a bit smaller; which is the concern around share dilution.
So, considering that the pieces of the INO pie are going to get smaller, it only makes sense that the stock would fall in value. For example, we saw the same thing with Genetic Therapeutics (NASDAQ: GENE). The company is just now starting to make a recovery from dilution that happened nearly 3 months ago.
It Doesn’t Look Like INO Will Suffer GENE’s Fate
From the looks of it, INO may have already started to bounce back from the dilution. While GENE saw downtrends for more than a month following their fund raising, INO is already starting to move in the positive direction today. Currently (1:28), Inovio is trading at $8.36 per share after a gain of 2.46% so far today.
What We Can Expect To See From Inovio Pharmaceuticals Moving Forward
Moving forward, I have quite a bit of faith in INO, even though dilution is obviously an issue. However, I don’t think INO is going to suffer in the long term from the new offering. As a matter of fact, I think we may have already reached the floor. So, now could be a great time to get in on the action.
What Do You Think?
Where do you think INO is headed and why? Let us know in the comments below!