APRN - Rights offerings: What are they and how do they affect share price?

Rights offerings are making a comeback. This year, the method accounted for $2.5B capital funds raised in the US - the most in 3 years. On Wednesday, Blue Apron's (NYSE:APRN) stock price jumped roughly 30% after the company announced a $78M equity capital raise, over half of the company's previous market cap, in the form of a $45M rights offering and two private placements. Companies generally use rights offerings when they need to raise cash and want to ensure that existing shareholders have the option to not be diluted. Additionally, rights offerings avoid the underwriting fees that come with traditional stock offerings and tax benefits. Shareholders are granted the option, but not the right, to purchase additional shares on a pro rata basis. If a shareholder does not wish to participate, he/she can sell their rights, as the rights are generally tradeable on the open market, or let their rights

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Rights offerings: What are they and how do they affect share price?