3D Systems (DDD) -5.4% AH after announcing a $100M stock offering. Given a market cap of $1.63B...

3D Systems (DDD) -5.4% AH after announcing a $100M stock offering. Given a market cap of $1.63B as of today's close, the offering stands to dilute existing shareholders by over 6%. The 3D printer vendor says it intends to use the proceeds to finance future acquisitions, and for working capital and general corporate purposes. (PR)

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Comments (3)
  • kirk otis
    , contributor
    Comments (357) | Send Message
    Your math is flawed. Yes each holder will hold 6% less ownership, but because the firm will have $100M additional cash and the market cap will increase by $100M the value of the holding will increase by an offsetting amount amount. Thus there should be no diminution in the value of their holdings, no economic dilution. This assumes the shares are issued at the market price and ignores the cost of the transaction, and if there is a discount, the risk reduction and productive uses for the cash offset those costs (better terms, capital projects, etc.)


    There is however the negative effect of the signals this gives. One is the firm either believes the stock is over valued and this is a great time to grab cash, second, the company needs cash because of the burn rate, or three, companies that are cash rich spend less carefully than cash poor companies.
    12 Jun 2012, 10:41 PM Reply Like
  • haruglory12
    , contributor
    Comments (54) | Send Message
    DDD uses the role up model to increase eps and revenue. So the issuing of stock is no big deal. The stocks relative strength is also high considering the correction in the general market and it hit new highs recently.
    12 Jun 2012, 11:06 PM Reply Like
  • hottttdog
    , contributor
    Comments (19) | Send Message
    What IS A BIG DEAL is the insider trading by the CTO and three Directors shortly before the stock dilution was first announced! Why would the company sell at an 18% discount (from the high of $33) when the stock had just hit a 52 week high? Apparently all 4M shares offered have already been traded. Which begs the question if company insiders also bought early in the offering! Where is the SEC when you need them?
    14 Jun 2012, 10:52 AM Reply Like
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