Verastem (VSTM) Stock: Falling Hard On Offering News


Verastem Inc (NASDAQ: VSTM) is having an overwhelmingly rough start to the trading session this morning after the company announced a public offering of common stock. Of course, the offering means that dilution is to come, causing fear among investors and sending the stock screaming for the bottom. Today, we’ll talk about the news, what we’re seeing from the stock, and what we’ll be watching for with regard to VSTM ahead.

VSTM Announces Public Offering Of Shares

As mentioned above, Verastem is having an incredibly rough start to the trading session this morning after the company announced that it will be moving forward with an offering. In a press release issued early this morning, the company announced that it has commenced a registered underwritten public offering of $35 million of its shares of common stock. The company also announced that it has granted the underwriter on the deal a 30-day option to purchase up to an additional $5.25 million of its shares. In the announcement, VSTM said that all shares are to be sold directly by the company.

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 moves the market. In the case of VSTM, the news proved to be concerning. After all, when new shares are issued and sold, everyone that’s already eating a piece of the pie looks down to see that their piece of the pie has shrunk. At the end of the day, dilution is never viewed as a good thing by investors. So, considering that Verastem released news surrounding a dilutive offering, it’s no surprise 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. At the moment (9:15), VSTM is trading at $4.49 per share after a loss of $0.75 per share (14.31%) 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 VSTM. In particular, we’re interested in following the company to see how the money from this offering is used. Sure, dilution is never a good thing. However, having the funds that are needed to move forward with trials, regulatory approval, and commercialization is a good thing. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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