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.
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.
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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.