Meten EdtechX Education (NASDAQ:METX) stock is falling hard on Thursday after the Chinese company revealed details of a public underwritten offering.
According to a press release from Meten EdtechX Education, the company plans to price shares at 30 cents each in the offering. Why does that matter? Because METX stock was trading at 92 cents when markets closed yesterday.
Public underwritten offerings are already an effective way to drop the price of a stock as traders don’t like seeing their investments lose value. However, this is an extreme case of Meten EdtechX Education pricing shares of METX stock well below its current trading level.
To go along with this, each share in the offering also comes with one pre-funded warrant. These warrants will allow the buyers in the offering to acquire additional shares of METX stock.
The public underwritten offering will see it offering up a total of 200 million shares of METX stock at a price of 30 cents per share. Meten EdtechX Education is expecting gross proceeds from this offering to come in at about $60 million.
So what does Meten EdtechX Education plan to do with the funds from this offering. It lists “capital expenditure, general corporate and working capital needs” as its focus for the funds it will gain from this public underwritten offering.
METX stock is experiencing heavy trading today following the offering news. As of this writing, more than 87 million shares of the stock have changed hands. That’s a major increase over its daily average trading volume of about 6.2 million shares.
METX stock was down 53% as of Thursday morning.
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