Acacia Communications, Inc. (NASDAQ:ACIA) is getting walloped out of the gate this morning, with ACIA stock down 9.2% as of this writing.
The catalyst for Monday’s move lower is Acacia’s proposed $450 million common stock offering, with $125 million coming directly from the company and the rest from selling shareholders.
In ACIA stock’s short lifespan, the company’s equity rose 250%-plus. That’s not a bad return by any means, especially considering the broader market wafted up just 5% during that time.
The offering will dilute the value of current shares, but this dip is likely a near-term setback rather than a long-term issue.
That’s because the fundamental case for ACIA stock is going strong. In an SEC filing today, Acacia fed the bulls with higher third-quarter guidance.
The company now sees revenue in the range of $127 million to $131 million and per-share earnings of 72 cents to 81 cents. The Street pegged revenue at $127.7 and EPS at 72 cents.
We’ll find out just how much higher ACIA stock goes after it reports Q3 earnings Nov. 10.
Bottom Line for ACIA Stock
In the meantime, now could be a good dip-buying opportunity ahead of what could be a nice gap up on earnings. Then again, a 250% rise in the ACIA stock price in such a short time could mean the stock is overheating, and shares are high above support at the 50-day moving average of $92.87.
Indeed, short sellers are piled some 7% into Acacia shares, and that number could grow as we approach the lock-up expiration date a day before ACIA earnings.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
