I’ve been seeing news about companies doing common stock offerings lately. I am still trying to understand what this means for regular traders.
Does this generally cause the stock price to drop right away? Is it a good idea to buy during the offering or should I wait until it is over?
I had a stock in my watchlist announce one last month and the price dropped quite a bit.
Stock drops after offerings happen all the time. More shares flooding the market dilutes what you own, so prices fall. Companies need the cash.
Timing’s everything here. Smart money usually bails right before or when they announce. Don’t buy during the offering - institutions are dumping shares at fixed prices.
Wait until it’s done and watch the volume. Once the selling pressure lets up, you’ll likely see it bounce back.
Stock offerings can lead to price drops since they dilute existing shares. Drops often occur right after announcements.
What you experienced is normal. Stocks tend to remain weak until the offering concludes.
It’s wise to wait until it’s finished. Selling pressure usually lessens once buyers take in the new shares.
That drop’s common. I usually wait until volume stabilizes before buying.
Got burned hard on a biotech stock two years back. Jumped in right after they announced the offering - thought I was getting a deal.
Down 40% in three days because I had no clue what I was doing. The offering price was way below market and institutions just kept dumping.
Now I track when offerings wrap up and watch for reversal signals once the selling dries up.
Prices usually drop because of dilution - more shares flooding the market without enough buyers to match.
Don’t buy during offerings:
• Institutions keep selling
• They’re priced below market rate
• Trading volume stays high
Wait for the offering to finish, then watch how the price moves before jumping in.