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S.Crawford2012

01/08/2021 04:28

$Bionano Genomics I was reading ๐Ÿ“što catch up on the messages posted on here today and thought I would share something of value.

One key take away is that we need to know is:
Is BNGO stock offering using existing shares owned by the company or are they new shares created (big difference between the two).

One is good and one is bad...in simple English, if they are new, they cause dilution.

A public offering is a corporationโ€™s sale of stock shares to the public. The effect of a public offering on a stock price depends on whether the additional shares are newly created or are existing, privately owned shares held by company insiders. Newly created shares typically hurt stock prices, but itโ€™s not always a sure thing.

Tip

The effect of a public offering on stock price will ultimately be determined by the specific type of shares offered. If the shares are being newly created, for example, this could dilute the share price and lower the per-share return.

Understanding Dilutive Offerings

Stock shares represent a partial ownership of the company. The more shares you hold, the bigger the slice of the company you own. As an owner, you are entitled to vote at corporate meetings and to participate in the growth of the company through dividends and higher share prices. One measure of share value is earnings per share (EPS), which is the annual profit of the corporation divided by the number of shares.
The money raised by a public offering is not earnings. Dilution occurs when new shares are offered to the public, because earnings must be divvied up among a larger number of shares. Dilution therefore lowers a stockโ€™s EPS ratio and reduces each shareโ€™s intrinsic value. The inverse of EPS is known as the price/earnings ratio, or P/E. All things being equal, a dilutive offering reduces earnings per share, so price should fall to maintain the same P/E ratio.

Dilutive Offering Example

Suppose a company had previously issued 1 million shares and earned a profit of $50M this year. The EPS is therefore $50M/1M, or $50. The price per share happens to be $180 before a new offering, at which time the company issues 100,000 new shares, creating a an EPS of $45.45 ($50M/1.1M). The price/earnings ratio before the sale is $180/$50, or 3.6. To maintain the same P/E ratio post-sale, the stock price must fall to $163.62 (that is, 3.6 x $45,45).

Exploring Non-Dilutive Offerings

Some secondary offerings are non-dilutive because they donโ€™t involve the creation of new shares. Frequently, when a company offers public shares for the first time (an initial public offering, or IPO), corporate insiders such as founders, directors and venture capitalists are barred from participating. Instead, they must wait a certain amount of time, called a lockup period, before they can sell their shares to the public.
A non-dilutive secondary offering occurs at the end of a lockup period when insiders cash out their shares all at once. No new shares are created and no dilution of EPS occurs. Therefore, no price change need occur due to this type of public offering

A Word of Caution

A dilutive stock offering should lower prices, assuming the demand remains unchanged. However, that isnโ€™t always a safe assumption. For example, a company known as CRISPR Therapeutics A.G. saw stock prices rise 17 percent on the day it announced a dilutive secondary offering in January 2018.
This can only be due to an increase in demand. While the reasons aren't always be certain, itโ€™s quite possible investors were encouraged that CRISPR would use the sale proceeds to grow the company and increase profits.

glta, let me know if you have any questions.
Disclaimer: The comments, opinions and analysis expressed herein are for informational and educational purposes only and shoulk not be considered as individual investment advice or recommendations. Webull is not responsible or liable in any way for comments posted by pur users.

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All Comments(7)

Tru***com01/08/2021 05:34
To my understanding, BNGO filed for a shelf registration in August of 2020 to be able to do the offering; SEC approved August 25, 2020. Shelf offerings, correct me if Iโ€™m wrong, is valid for 1 year.

Fast forward, BNGO did not execute offering, stock went up in Dec and BNGO letโ€™s it ride.

Stock finds support around mid 4โ€™s and has events/news/press coming up 01/11 - 01/15.

BNGO annouces today that they PLAN to offer and sell, subject to market and other conditions. So to be clear, we donโ€™t know when, if, how much, Etc., *Keep an eye on news to see if CEO, underwriters, employees, etc. buy shares when offering happens because it shows good sentiment. Think - Elon buying millions of shares himself during model 3 hell days and teslaโ€™s offering (stock was not hurt at all. In fact, stock went up 17%.)

I hope Iโ€™m not wrong, but I think CEO is trying to be transparent with investors. They could use the money to put into the company (rightfully so) and even with the greatest of news next week, they are letting us all know that the offering is bound to happen.

I donโ€™t see this as bad news. I think it shows confidence and good leadership over at BNGO.

S.Crawford201201/08/2021 11:37

I love the way you think. imho I don't think it's bad news at all. And I don't think you are wrong.
There is so much I want to explain to others on the Board to help, but MM and other manipulator do a good job by scaring them with quick sudden and hard drops. When in fact it's just the way those in control make money on anyone that is new to this game.
Today we are going to see another scare tactic and some or many inexperienced investors will fall for it.
Thank you for your contribution.

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mar***com01/08/2021 05:09
๐Ÿ‘๐Ÿผ๐Ÿ‘๐Ÿผ๐Ÿ‘๐Ÿผ๐Ÿ‘๐Ÿผ๐Ÿ‘๐Ÿผ thank you for explaining that so well!!

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$ocraye3401/08/2021 05:09
I just read this on Google lol guess I am doing something right. btw these are my words but I remember them saying that the dilution would be minimal but idk if they could know that. Also what if just for example arkk jumped on we probably wouldn't even see much if any dilution or am I wrong?

$ocraye3401/08/2021 05:28

yea read that too. your the expert. I will understand more when it goes down and I'm not going anywhere. ty though

S.Crawford201201/08/2021 05:21

we still don't know everything. Here :The company revealed Thursday afternoon that it expects to sell more shares under a shelf prospectus filed in August,๐Ÿ‘‰๐Ÿ‘‰ but did not spell out how many shares it plans to sell nor at what price.๐Ÿ‘ˆ๐Ÿ‘ˆ

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san***com01/08/2021 04:40
Great write up. I have a strong feeling BNGO is in high demand

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11secMustang&M5 Girl01/08/2021 04:40
Thanks for being thorough

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Fortiz301/08/2021 04:39
๐Ÿป๐Ÿป๐Ÿป

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Oystersauce01/08/2021 04:39
This is a public offering not a direct offering. ITs โ€œthe bad oneโ€

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