NBRV - Why Is Esports Entertainment (GMBL) Stock Down 45% Today?
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Esports Entertainment (NASDAQ:GMBL) stock is falling hard on Friday after the company revealed public stock offering details.
The latest press release has Esports Entertainment pricing its shares at 25 cents each in the public stock offering. For the record, shares of GMBL were trading at 33 cents per share when markets closed on Thursday.
With this latest offering, the company intends to offer 30 million shares of GMBL stock. The offering also ties warrants to purchase an additional 30 million shares to the stocks being offered. Those warrants are immediately exercisable for a price of 25 cents.
To go along with this, underwriters of the offering can also acquire an additional 4.5 million shares and warrants at the offering price. Maxim Group and Joseph Gunnar & Co. are the book-running managers of the offering.
Esports Entertainment notes that the offering will generate $7.5 million prior to underwriting expenses. The company will use these funds for working capital and to pay off some of its outstanding senior notes.
GMBL Investors Appear Unhappy About the News
The public offering dilutes the investment current GMBL shareholders have in the company. Also, it’s causing extra volatility to the penny stock today. That means investors will want to be careful about taking a stake in Esports Entertainment.
Heavy trading of GMBL stock follows today’s public offering news. This has over 29 million shares on the move as of this writing. That’s well above its daily average trading volume of roughly 1.2 million shares.
GMBL stock is down 44.7% as of Friday morning.
There’s more stock market news traders will want to know about below!
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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