Reshape Lifesciences Inc (NASDAQ: RSLS) is having an incredibly rough start to the trading session this morning, and for good reason. The company announced the pricing of an offering that’s proving to be a source of concern for investors. Today, we’ll talk about:
- The offering;
- what we’re seeing from RSLS as a result; and
- what we’ll be watching for ahead.
RSLS Heads Spirals Down On Offering
As mentioned above, ReShape Lifesciences is having an incredibly rough start to the trading session today. After announcing the expansion of its ReShape Balloon implant yesterday, the company followed up the news with news surrounding a dilutive offering.
In a press release issued early this morning, RSLS announced that it has entered into definitive agreements with various institutional investors surrounding the purchase of 1,241,382 shares of common stock at a price of $2.05 per share. Through the offering, the company is expecting to generate gross proceeds of about $2.55 million.
According to the release, RSLS has also agreed to issue the investors unregistered warrants to purchase up to 1,241,382 shares of common stock at a price per warrant of $0.125, bringing gross proceeds of this transaction to $0.15 million. In the release, the company said that the closing of the transaction is expected to take place on or about July 12, 2018, subject to the satisfaction of customary closing conditions.
What We’re Seeing From The Stock
One of the first things that we learn when we start to dig into the market is that the news causes moves. In the case of ReShape Lifesciences, the news proved to be overwhelmingly negative. After all, dilution is never a good thing. However, adding in this amount of warrants at such a low price and making them exercisable immediately, well, that just gives the instutional investors a chance to play at the expense of retail investors, ultimately adding insult to injury. So, it’s no surprise to see that the stock is falling hard in the pre-market hours. Of course, our partners at Trade Ideas were the first to alert us to the declines. At the moment (9:17), RSLS is trading at $1.80 per share after a loss of $0.24 per share or 11.76% 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 RSLS. In particular, we’re interested in following the story surrounding the company’s continued expansion of its Balloon implant business, considering the more than $2 million in funding that’s coming the company’s way. Nonetheless, we’ll continue to follow the story closely and bring the news ot you as it breaks!
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