U.S. companies capitalize on high stock prices by selling new stocks at the fastest pace in 25 years

0
  • US publicly traded companies are rushing to issue new shares.
  • Dealogic data cited by the Wall Street Journal shows the number of “follow-up offers” at 556 as of August 24, the highest level since the start of the year since 1996.
  • Companies that have issued new stocks include familiar names like Zoom and smaller stocks like Plug Power.
  • Sign up for our daily newsletter, 10 things before the opening bell here.

U.S. publicly traded companies including stock favorites GameStop and AMC are rushing to issue new stocks, taking advantage of rich valuations, according to a Wall Street Journal report.

Dealogic data cited by the Journal shows that follow-up offers – that is, the sale of new shares by listed companies – at 556 as of August 24, the highest level since the start of the year since 1996. In terms of value, those stock offerings were worth a combined $ 75 billion, the highest on record and up 70% from last year.

In addition to GameStop and AMC, which have seen their stock prices skyrocket this year, the 556 companies that have issued new stock include names known as Zoom and smaller stocks like Plug Power. The group of companies covers the gamut in terms of underlying financial data, from pandemic winner Zoom to never profitable Plug.

“People have started to profit from the incredible acceleration in the market,” Josh Weismer, head of US equities at Mizuho Americas, told The Journal. “I think we’ll definitely continue to see the busy follow-up market.”

In April, before its share price took off, AMC issued 43 million shares, worth about $ 500 million at the April 27 price, although the shares were not sold in just once. Then, in June, it issued an additional $ 11.6 million, as the share price peaked, raising $ 587 million in a three-hour sell-off that quickly passed.

“Our current market prices reflect market dynamics and trade unrelated to our underlying business,” the movie chain said in a filing with the SEC in June. “We do not recommend that you invest in our Class A common shares unless you are prepared to take the risk of losing all or a substantial part of your investment.”

Nonetheless, keen to cash in on its unprecedented valuation, AMC offered to issue an additional 25 million shares and said it would put the decision to a shareholder vote. He withdrew from the vote a few weeks later, following backlash from the company’s dedicated retail base.

Share.

Comments are closed.