Today, investors looking at crypto investments are largely seeing green. Various large-cap cryptocurrencies are surging right now. Additionally, crypto miners validating and securing the blockchains for these cryptocurrencies are generally doing okay. However, for investors in Hut 8 Mining (NASDAQ:HUT) and HUT stock, today’s been a very disappointing day.
Indeed, shares of HUT stock are currently down approximately 15% on more than three times the average daily volume. This move is significant, as it represents a divergence from the company’s peers.
Of course, there’s a key catalyst driving today’s price action in HUT stock. Let’s take a look at what’s behind today’s move in this crypto mining stock.
HUT Stock Dropping on Equity Issuance
Among the benefits of being a publicly traded crypto miner is access to capital. Of course, scaling one’s mining operations requires a lot of upfront capital. Those looking at investing in this sector know this to be the case.
However, when an equity issuance comes in at a serious discount to where a given company’s stock price is trading, investors take notice. Today, Hut 8 revealed the pricing for its previously announced equity issuance expected to close this week.
The issuance of 17.6 million shares at a price of $8.55 per share is substantially lower than yesterday’s close at $10.37. Accordingly, investors may wonder if institutional demand for HUT stock is as strong as was once thought. Indeed, when investors demand such a discount to the spot price of a given stock, investors tend to re-rate the stock down toward that discounted level.
Such has been the case today.
That said, Hut 8 will receive proceeds of more than $150 million from this transaction. That’s a lot of growth capital for this crypto miner. Accordingly, there’s a bullish growth argument that can be made regarding this deal today.
Where HUT stock goes from here remains to be seen. However, this stock’s price action in the coming days will be intriguing to watch.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
