Reshape Lifesciences Inc (NASDAQ: RSLS) is having an overwhelmingly rough start to the trading session this morning, and for good reason. The company announced a registered direct offering that proved to be overwhelmingly dilutive. Of course, this led to upset investors who are quickly pushing the stock to the bottom. Today, we’ll talk about the offering, what we’re seeing from RSLS, and what we’ll be watching for ahead.
RSLS Announces Registered Direct Offering
As mentioned above, ReShape Lifesciences is having an overwhelmingly rough start to the trading session this morning after announcing an incredibly dilutive direct offering transaction. In a press release issued early this morning, the company announced that it has entered into a securities purchase agreement with an institutional investor providing for the purchase and sale in a registered direct offering of shares of Series D convertible preferred stock and a warrant to purchase shares of common stock. According to the release, the institutional investor has agreed to purchase the units of shares and a warrant from RSLS for a total price of $6.0 million.
The company said that the series D convertible preferred stock will be converted into an aggregate of 8 million shares of common stock. The conversion price on the series D units comes at $0.75 per sharem and the warrant will have a one-year term and be exercisable for 35 million shares of common stock at the $0.75 per share price.
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. In this particular case, the news proved to be overwhelmingly negative. As a result of this transaction, shares already owned by shareholders will be diluted in a big way. So, it’s no surprise to see that the stock is falling hard. Of course, our partners at Trade Ideas were the first to alert us to the declines. At the moment (8:54), RSLS is trading at $0.76 per share after a loss of $0.69 per share (47.59%) 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 company and what it does with this funding. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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