TOP Ships TOPS Stock News

Yesterday, TOP Ships Inc (NASDAQ: TOPS) saw incredible gains in the market, closing the day up over 130%. The gains came as the result of excitement surrounding an asset sale and the current climate in shipping in terms of demand and expenses. Read this article to learn more.

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Nonetheless, it’s a whole new day today, and the stock is giving back a large chunk of its gains. After the offering announcement, fears surrounding dilution are building, sending the stock down more than 50%. Here’s what’s going on:

TOPS Stock Is Falling Hard On Offering

As mentioned above, TOP Ships is seeing sustantial declines in the market this morning after announcing an offering. In the announcement, the company said that it entered into a placement agent agreement with Maxim Group surronding the sale of the securities.

As part of the agreement, TOPS entered into a securities purchase agreement with certain institutional investors in connection with a registered direct offering of about 40 million shares of stock at a price of $0.20 per share. It is expected that the offering will generate about $8 million in gross proceeds.

In the release, the company said that the offering should come to a close on or about April 1 of this year. Of course, the transaction is subject to customary closing conditions.

What’s The Big Deal?

Those who are new comers or simply don’t understand offerings like this may wonder what the big deal is here. Well, the answer is simple. Investors are upset as TOP Ships is diluting the value of every share out there.

When an offering like this takes place, new shares are issued. However, the company doesn’t grow. So, adding these new shares is like adding slices to a pie. Of course, with more slices, each individual slice gets smaller.

Essentially, as a result of the offering, 40 million new shares of TOPS are being issued. That means that 40 million new slices of pie are being squeezed in here. Moreover, the shares are being sold at $0.20 each. With yesterday’s closing price of $0.54 per share, this pricing is a bit of a slap to the retail investor’s face.

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1 COMMENT

  1. Very new to trading and have started to follow a few blogs, discord’s etc. in the last few weeks, this was the easiest to understand for a new trader Article I have read, and believe me over the last few weeks I have read hundreds. Thank you

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