T2 Biosystems (NASDAQ:TTOO) stock is falling hard on Tuesday as investors react to a proposed public offering from the company.
T2 Biosystems doesn’t reveal much in the way of details about its proposed public offering. Instead, the company simply states that it’s planning one. It doesn’t discuss how many shares will be offered, the price of those shares, or how much it expects to raise from the offering.
What T2 Biosystems does tell investors is who the underwriter for the offering is. Craig-Hallum Capital Group LLC is serving as the sole managing underwriter for the proposed public offer of TTOO stock.
What This Means for TTOO Stock
With T2 Biosystems planning to offer new shares, the company’s total outstanding shares will increase. The company will also likely price the offering below the market value of TTOO stock. Both of those are likely to negatively affect the company’s shares.
That’s due to investor reactions to public stock offerings. New shares dilute current shareholders’ stake in the company. A lower offering price also devalues their investments. Both of these are reasons for investors to react negatively to a public stock offering.
TTOO stock is down 21.4% as of Tuesday morning.
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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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