Why Is Grom Social (GROM) Stock Down 62% Today?

  • Grom Social (GROM) stock is taking a beating on Friday after pricing a public offering.
  • That includes 1,415,682 units and 314,422 pre-funded units.
  • The offer prices these at roughly $2.89 each.
GROM Stock - Why Is Grom Social (GROM) Stock Down 62% Today?

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Grom Social (NASDAQ:GROM) stock is taking a beating on Friday after the social media company priced a public offering of its shares.

The stock offering includes 1,415,682 units and 314,422 pre-funded units. The normal units are priced at $2.89 each and the pre-funded ones are priced roughly the same at $2.889 each. This has the company expecting $5 million in gross proceeds from the public stock offering.

Included in each of the normal units is a single share of GROM stock, as well as two warrants. Those warrants allow the holder to purchase one additional share of GROM stock each. The exercise price for these warrants is $2.89 per share.

Investors that purchase the units will be able to exercise the warrants as soon as they get them. Also, the warrants have a five-year expiration period following the date of their issuance.

As for the pre-funded units, those contain one pre-funded warrant and two warrants identical to those in the normal units. The pre-funded warrants are exercisable for $0.001 per share until all units are exercised.

Why the Negative Reaction for GROM Stock?

Investors don’t like public offerings often as it serves as a way to dilute their holdings in a company. Also, the offerings typically offer shares at a heavy discount. For example, GROM stock closed out trading on Thursday at $3.86 per share, as compared to the $2.89 unit price.

This has GROM stock falling hard on Friday with the company’s shares down 61.9% as of this afternoon.

Investors seeking more of the latest stock market news will want to stick around!

InvestorPlace has all of the hottest stock news traders need to know about on Friday! A few examples include what’s happening with shares of DocuSign (NASDAQ:DOCU) and Mullen Automotive (NASDAQ:MULN) stock today. You can find out more on these matters at the links below!

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On the date of publication, William White 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.


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