Novavax, Inc. (NASDAQ: NVAX) is having an overwhelmingly rough start to the trading session this morning after announcing the pricing of a public offering of common stock. Of course, the offering is one that will dilute shares, leading to concerns in the market and sending the stock tumbling downward. Today, we’ll talk about:
- The offering that was announced;
- what we’re seeing from NVAX as a result; and
- what we’ll be watching for ahead.
NVAX Falls Hard On Offering News
As mentioned above, Novavax is having an overwhelmingly rough start to the trading session this morning after announcing the pricing of a public offering. In a press release issued early this morning, the company announced that it has priced 30,303,050 shares of common stock to be offered to the public at $1.65 per share. As a result, the company is expecting to generate gross proceeds in the amount of $50 million before deducting underwriting discounts and other offering expenses. Also, NVAX has granted the underwriters a 30-day option to purchase up to an additional 4,545,457 shares at this price.
In the release, NVAX said that it intends to use the net proceeds from the offering for general corporate purposes. The company said that this includes, but is not limited to, working capital, capital expenditures, R&D costs related to clinical and preclinical vaccine candidates, clinical trial expenditures, and acquisitions and other strategic costs. It is expected that this offering will close on or about April 16, 2018. Of course, the offering is subject to the satisfaction of customary closing conditions.
What We’re Seeing from The Stock
One of the first lessons that we learn when we start to dabble in the market is that the news causes moves. Unfortunately for Novavax, the news released today proved to be painful for investors. After all, the company is issuing more than 30 million new shares at more than a 15% discount to the previous closing price on the stock. That, my friends, is dilution at its finest. So, it’s no surprise to see that the stock is falling in the market this morning. As is almost always the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (9:02), NVAX is trading at $1.75 per share after a loss of $0.33 per share (15.87%) 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 NVAX. In particular, we’re interested in following the offering and the funds generated to see how the company uses these funds to better their position. Nonetheless, there’s no doubt that the dilution felt as a result of this offering is painful. We’ll continue to follow the story closely and bring the news to you as it breaks!
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