High tide (NASDAQ:HITI) the stock is beaten on Tuesday as investors react to a public offering of shares from the cannabis company.
According to a press release from High Tide, it has reached an agreement with an underwriting group led by Echelon Wealth Partners. This will allow these subscribers to acquire 4,310,400 units of the company.
So why is HITI stock dropping today? First, investors are likely unhappy with the transaction price of C$2.32 per unit. Second, stock offerings generally harm stocks because they dilute shareholders’ current stakes in the company.
To accompany this, the agreement signed by High Tide provides that each unit contains one HITI share and a warrant to purchase an additional share. These warrants have a term of 60 months and are exercisable for C$2.73 each. There is also an option for subscribers to acquire an additional 646,560 up to 30 days after the transaction closes.
High Tide expects to raise up to C$11.5 million through the equity offering. The company intends to use these funds for “the construction and opening of new cannabis retail stores, the repayment of debt, and for general corporate and working capital purposes.”
This news causes HITI stocks to see intense trading today. This has around 1 million shares in motion so far. That’s above its average daily trading volume of around 137,000 shares.
HITI stock is down 22.8% on Tuesday morning.
Investors looking for more stock market information today are in luck!
We have all the latest stock market news traders need to know for Tuesday! Some examples include why the shares of Exela Technologies (NASDAQ:XELA), NCR (NYSE:NCR), and Digital Marathon (NASDAQ:MARA) stocks are on the move. You can find out all about these questions in the links below!
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As of the date of publication, William White had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.