Doing so requires a lot of spending to attract customers, build brand awareness, develop technical advantages, and fend off competition. Two, hypergrowth companies do these raises because these companies are usually in the early stages of pioneering a new market category. This is a par-for-the-course move that’s entirely unsurprising. One, hypergrowth companies with soaring stock prices almost always take advantage of their market momentum to raise money via a favorable equity offering. Simple enough, right? Equity raises = bad news for existing shareholders.īut, that cursory analysis lacks context. So, even if the value of the company doesn’t change, the PLUG stock price should in response to this offering thanks to a bigger share count. Plug Power stock price equals the value of the company divided by the share count. Thus, the share count will rise to over 400 million. This new offering adds 38 million more shares into the mix. The diluted share count last quarter was around 370 million. Plug Power’s equity raise will do just that. Investors usually don’t like equity raises. Technically, what they amount to is dilution through new shares. Dilution Offset by Balance Sheet Firepower It usually results in near-term weakness, followed by some consolidation, and then a breakout higher. It’s par-for-the-course for hypergrowth companies with soaring stock prices to capitalize on their market momentum and issue favorable equity raises at below-market prices, giving them the funds to further enhance their growth profile. And if you’re worried about the stock dropping 7% in a day, don’t be. Naturally, in response to the news, Plug Power stock is falling back toward the offering price. The PLUG stock price at the time the offering was announced was north of $25. Specifically, Plug Power is selling 38 million shares of common stock to the public at $22.25 per share.