Why Is Esports Entertainment (GMBL) Stock Down 45% Today?

  • Esports Entertainment (GMBL) stock is falling after pricing its public stock offering.
  • This has the company valuing shares at 25 cents, well below yesterday’s close.
  • The offering includes 30 million shares and warrants.
GMBl Stock A row of people wearing matching outfits and headsets play a video game together in a room with blue lighting.

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Esports Entertainment (NASDAQ:GMBL) stock is falling hard on Friday after the company revealed public stock offering details.

The latest press release has Esports Entertainment pricing its shares at 25 cents each in the public stock offering. For the record, shares of GMBL stock traded at 33 cents per share when markets closed on Thursday.

With this latest offering, the company intends to offer 30 million shares of GMBL stock. The offering also ties warrants to purchase an additional 30 million shares. Those warrants are immediately exercisable at a price of 25 cents.

To go along with this news, underwriters of the offering can also acquire an additional 4.5 million shares and warrants at the offering price. Maxim Group and Joseph Gunnar & Co. are the book-running managers of the offering.

Esports Entertainment notes that the offering will generate $7.5 million prior to underwriting expenses. The company will use these funds for working capital and to “repay a portion of its outstanding senior convertible note.”

GMBL Stock Investors Appear Unhappy About the News

This public offering dilutes the investment current GMBL shareholders have in the company. It’s also causing extra volatility for the penny stock today. That means investors will want to be careful about taking a stake in shares.

Heavy trading of GMBL stock follows today’s news. This has over 29 million shares on the move as of this writing. That’s well above the daily average trading volume of roughly 1.2 million shares.

GMBL stock is down 45% as of Friday morning.

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On the date of publication, William White 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.

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