Send me real-time posts from this site at my email
Motley Fool

Why iClick Stock Plunged Today

What happened

Shares of iClick Interactive Asia Group (NASDAQ: ICLK) have plunged today, down by 16% as of 2:45 p.m. EDT, after the company kicked off a secondary offering. iClick is selling approximately 7.9 million American depositary shares (ADSs), with two ADSs representing one Class A ordinary share.

So what

The total number of ADSs being offered includes 6.3 million from the company itself in addition to another 1.6 million offered by existing shareholder Sumitomo. iClick won't receive any of the proceeds from shares sold by Sumitomo. The Chinese marketing technology company is also granting underwriters a 30-day option to purchase up to an additional 15% of the total ADSs.

Image source: Getty Images.

Existing shareholders will face meaningful dilution from the deal. The 6.3 million new ADSs being issued represent around 7% of current ADSs outstanding. There will be roughly 93.9 million to 95.1 million ADSs outstanding after the offering, depending on whether underwriters exercise their options. The offering comes a few months after iClick raised $22 million through a private placement over the summer.

Now what

On the earnings call last week, CFO Terence Li emphasized that iClick is ensuring that it has sufficient capital to fund strategic initiatives, such as growing the company's enterprise solutions segment. That division will be iClick's "main focus for many years to come," according to Li.

iClick intends to use the net proceeds from the deal to help fund research and development, as well as other general corporate purposes like working capital, according to the prospectus. The offering has not yet priced.

10 stocks we like better than iClick Interactive Asia Group Ltd
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and iClick Interactive Asia Group Ltd wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 1, 2020

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue