Investing

Secondary Offerings and Capital Raises Weigh Heavily on 7 Stocks

Genius Brands has been in the news in recent weeks, with its shares sent sky high due to the launch of its Kartoon Channel streaming lineup and also a recent investment with Arnold Schwarzenegger. The company’s draw has been the Rainbow Rangers, Llama Llama, SpacePop, Thomas Edison’s Secret Lab, Warren Buffet’s Secret Millionaire’s Club, Superhero Kindergarten and Baby Genius. With a market cap of $222 million, it has a 52-week trading range is $40.5 to $11.73, and its closing high during the excitement was $7.93.

PaySign Inc. (NASDAQ: PAYS) had first filed its S-1 for the resale of up to 1,514,166 common shares from time to time by existing stockholders. The amended filing was issued last week, and the maximum price per unit at that time was $7.35 per share, for a proposed maximum offering of just over $11.1 million. PaySign was down an additional 5% at $9.68 on Monday, with a market cap of $477 million and a 52-week trading range of $3.63 to $18.67.

RumbleON Inc. (NASDAQ: RMBL) was lower by 8.8% to $9.19 in Monday’s midday trading. The e-commerce platform for car dealers also reported earnings on Monday. An amended filing with the SEC indicated up to $38.75 million from a 6.75% convertible senior notes offering due in 2025 that was issued in January 2020, as well as 968,750 class B shares, for a total size of up to $30 million. RumbleON’s market cap is just $20 million.

Sunnova Energy International Inc. (NYSE: NOVA) filed to sell 8 million shares of stock, which would be 9.2 million shares if the overallotment option is exercised in full. The underwriting syndicate of JPMorgan, BofA Securities, Credit Suisse and Goldman Sachs is fairly large. Shares of this Houston-based solar company were down more than 1% at $18.85 as of Friday’s closing price, but they were down 12% at $16.57 in somewhat inactive trading on Monday. Its 52-week trading range is $6.12 to $20.87, and the market cap after the drop is listed as $1.4 billion.

While some companies are using secondary offerings to raise or bolster their capital, these are shareholder sales and the prospectus noted that some of the shares are issuable upon conversion of Sunnova’s 9.75% convertible senior notes due 2025, which were previously issued to certain of the selling stockholders. Those selling holders were shown to include Energy Capital Partners and Tortoise Capital Advisors.