"Ouch! Shares of disruptive fintech firm SoFi Technologies ( NASDAQ:SOFI) sank 6% to 7% on Friday even as the major stock market indexes were mostly in the green. What happened, and should SoFi Technologies' shareholders run for the hills? The fear and loathing relate to a capital raise disclosure that SoFi Technologies published Thursday night. Capital raises can make investors nervous, especially if there's a share sale involved."
"Thus, perhaps it shouldn't be too surprising that SoFi Technologies revealed a public offering and pricing of new common stock shares. Specifically, the company is offering 54,545,454 shares to the public at $27.50 per share, for total gross proceeds of around $1.5 billion. The market's reaction on Friday morning was immediate and severe. Upon receipt of the news, traders sent SOFI stock 6% to 7% lower, to the $27-to-$28 area."
SoFi Technologies provides personal banking, lending, trading, and other financial services and competes with traditional banks. The company revealed a public offering of 54,545,454 common shares priced at $27.50 each, targeting roughly $1.5 billion in gross proceeds. The offering news caused an immediate market reaction, sending SOFI shares down about 6% to 7% into the $27–$28 range. The selloff largely reflected investor concerns about share dilution rather than a clear signal of desperate capital needs. Long-term investors may benefit from the lower price, and panic-selling may not be warranted.
Read at 24/7 Wall St.
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