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Why Is SOS Limited (SOS) Stock Down 25% Today?

SOS is an appropriate trading symbol for SOS Limited (NYSE:SOS). The Chinese firm “provides data mining and analysis services” on the blockchain. For the past six months, however, the penny stock has been on a downward spiral. Anyone wondering why SOS stock is down today should know it just announced a second offering. But there are more factors to consider when assessing its future.

Bitcoin miners in large farm. ASIC mining equipment on stand racks mine cryptocurrency in steel container. Blockchain techology application specific integrated circuit datacenter. Server room lights. SOS Stock
Source: Artie Medvedev / Shutterstock.com

This morning, the company released a statement saying it has entered into an agreement with “certain accredited investors.” These investors will purchase approximately $20 million in American depositary shares (ADS) as part of a registered direct offering.

The second offering has certainly not helped SOS stock. As of this writing, it’s down 26% for the day and shows no signs of rallying. Shares have struggled all week, but today’s plunge represents an especially steep decline. On Monday, the company changed hands at 83 cents per share. Right now, it trades at 54 cents.

What’s Happening with SOS Stock?

SOS Limited hasn’t received much positive coverage lately. Earlier this month, it risked being delisted from the New York Stock Exchange. InvestorPlace contributor Stavros Georgiadis stated that investors betting on SOS stock “have witnessed a dramatic selloff and heavy losses that now seem most probably irreversible.”

Since then, nothing has changed regarding its financials. SOS stock has only fallen further. Micro-cap names trading under $1 per share have a hard enough time inspiring investor confidence. When a major index threatens to delist such a small company, there’s little it can do to hang on.

This second offering is clearly SOS Limited’s SOS signal. Put another way, it’s the company’s last-ditch effort to remain on a major exchange. If today’s performance is any indication, though, it will be too little too late. After a brief stint as a meme stock, SOS has either been unable to demonstrate real-world utility or overcome negative market forces. In any case, it has been falling for months.

What It Means

It’s not hard to see why SOS stock is falling so hard today. The second offering announcement didn’t excite investors. Rather, it sent them a clear message that the company has no other way of staying on the NYSE.

As InvestorPlace contributor Ian Bezek noted, SOS Limited has consistently failed to demonstrate credibility. Even the rising prices of Bitcoin (BTC-USD) haven’t been able to save the crypto-mining company. Of course, larger peers like Marathon Digital (NASDAQ:MARA) and Riot Blockchain (NASDAQ:RIOT) are also down today, but a key difference is that both were substantially in the green beforehand.

All told, SOS looks more and more like a sinking ship.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More:Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Samuel O’Brient did not hold (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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

Article printed from InvestorPlace Media, https://investorplace.com/2022/03/why-is-sos-limited-sos-stock-down-25-today/.

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