Today, China-based crypto miner SOS Limited (NYSE:SOS) has had a very rough day. Indeed, shares of SOS stock have dropped more than 25% at the time of writing, on very heavy volume.
For crypto-related investments, today has been a rather volatile day. Investors may note that Coinbase (NASDAQ:COIN) shares plunged this morning following a rather large earnings miss. Indeed, crypto prices, particularly those of the most valuable cryptocurrencies, remain elevated. Accordingly, one might look at a Bitcoin (CCC:BTC-USD) miner like SOS and consider now a great time to be invested.
However, some company-specific news appears to have investors in SOS stock worried today. Let’s dive into what the company announced and why SOS stock is selling off so sharply today.
SOS Stock Plunges On Direct Offering Announcement
Like many crypto miners, SOS is a company that’s raised capital via equity markets to fund growth. That’s not a new concept by any stretch of the imagination.
However, SOS’s announcement today that the company is planning to sell $90 million of stock to accredited investors at a price of $1.75 is an issue for investors holding this stock. That sale represents a 17% discount to yesterday’s close. Accordingly, investors appear to have thrown a tantrum, sending SOS stock to nearly $1.50 per share at the time of writing.
Now, most investors should note that private placements are typically done at some sort of discount to entice investors to jump aboard. However, why this offering was done privately and not via the public markets remains unknown.
Accordingly, SOS stock appears to be one investors view as higher-risk as a result of these offerings. More dilution is never a good thing. However, dilution at a massive discount is something investors may not have seen coming.
Currently, SOS stock is down approximately 90% from its 52-week high earlier this year.
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.