Secondary Offerings at JinkoSolar, Shutterstock Send Shares Higher
September 20, 2013 by Paul AusickIt is not often that a secondary stock offering sends a company’s shares higher, but we are seeing that very phenomenon Friday morning. Chinese solar PV maker JinkoSolar Holding Co. Ltd. (NYSE: JKS) and stock image company Shutterstock Inc. (NASDAQ: SSTK) both priced secondary offerings this morning and shares in both companies have risen sharply.
At JinkoSolar, shares priced at $16.25, after closing Thursday night at $16.48, and shortly before noon the stock was up by 13.8% at $18.75. The company offered 3.8 million shares and an underwriters’ option on an additional 570,000. JinkoSolar says it will use proceeds for general corporate purposes, which may include expanding its manufacturing capacity. That by itself should have sent shares down.
Shutterstock closed last night at $60.32 and priced its offering of 4.6 million shares at $60.00 this morning. The company is selling only 1 million shares; the rest are being sold by some existing shareholders. The underwriters have an option on an additional 690,000 shares. The company said the purpose behind the offering is to increase the company’s public float, among other things.
As far as JinkoSolar is concerned, part of the reason for the price jump is almost certainly a short squeeze. Institutional investors also are likely the heaviest buyers as they move toward some momentum stocks to juice up returns.
Shutterstock only had a public float of about 6.5 million shares, so it is likely adding liquidity. The stock is up more than 200% since the company’s IPO, and we can assume that there are real buyers out there who want in on the party. In addition, nearly 13% of the stock is held short, so there is some covering going on as well.
Still, it is an interesting turn of events to see shares jump on secondary offerings.
Shares of JinkoSolar are trading at $18.43 a few minutes after noon on Friday, in a 52-week range of $3.18 to $20.06.
Shutterstock’s shares are up nearly 12% at $67.46, after posting a new 52-week high earlier this morning of $68.42. The 52-week low is the IPO price of $21.00.
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