Freyr Battery (NYSE:FREY) is falling today on news of a new ordinary share offering. The electric vehicle (EV) battery and energy systems innovator has confirmed plans to issue 13,500,000 ordinary shares through an unwritten registered public offering. These shares will have no nominal value. According to a statement released by the company, Freyr plans to use the capital generated through the offering to fund its expansions in Norway and the U.S. FREY stock has not reacted well to the news. As of this writing, it is down more than 10% for the day. However, That doesn’t mean investors should be worried.
Let’s take a closer look at what Freyr’s latest news means for the stock.
What’s Happening With FREY Stock
When a company issues additional shares, this type of price action is normal. While a new ordinary share offering stands to raise capital for the issuing firm, it also increases the number of shares outstanding. This leads to the dilution of current share prices and selling pressure mounts. With this in mind, it’s not hard to see why FREY stock has been sliding today, though its current trajectory hints that it may turn around soon.
MarketWatch reports that pending no legal or regulatory complications, the offering is expected to close on Monday. As part of the offering, Freyr plans on granting underwriters a 30-day option to purchase up to 2,025,000 additional shares.
It’s easy to be concerned when a name like FREY stock drops 10% in just a few hours. But investors should be careful to see this story for the positive development that it is. While existing shares will be diluted to make room for new ones, the company is raising capital to continue scaling important developments. In 2022, Freyr has so far announced plans to begin construction on major gigafactories in the U.S. and Norway. Demand for clean battery and energy storage solutions is growing and Freyr is rising to meet it. But Freyr is more than just a battery maker. As InvestorPlace reports:
“Freyr is a more dynamic company that some investors realize. Its business centers on not just EV battery production but energy storage systems and e-mobility initiatives, including electric-powered buses. That puts it in an excellent position to provide U.S. automakers with several key components.”
The U.S. isn’t the only market that this company is trying to conquer, though. In September 2022, it announced the second phase of its plan to build a large-scale manufacturing facility in Norway, another market in which EV adaption is increasing. As the new offering makes clear, Freyr is focused on funding both expansions. This strategic choice will help boost FREY stock as the company corners lucrative new markets.
Freyr’s Future
If Freyr is able to get both facilities up and running smoothly, it will be excellent for both the company and EV producers in the U.S. and Europe.
Current investors need only wait for prices to rebound as selling pressure fades away. For aspiring investors, the current dip represents an excellent buying opportunity on one of 2023’s best EV bets. FREY stock is primed for growth as the company gains a foothold in both local and international markets.
On the date of publication, Samuel O’Brient 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.
