Virgin Galactic (NYSE:SPCE) stock is falling on Friday after the company announced a $400 million stock sale agreement.
This agreement is with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, and Goldman Sachs & Co. LLC. With this agreement, the company has the ability to sell shares of SPCE stock to these groups or through them.
Virgin Galactic highlights that its shares trade on the New York Stock Exchange and that they last traded for $5.32 per share. The offering comes with the stipulation of the shares sold being priced at market values.
Virgin Galactic also notes that the agents in the agreement aren’t required to buy or sell any SPCE stock. However, doing so will grant them a commission on sales. They will gain 2% of any proceeds from share sales.
What This Means for SPCE Stock
With this agreement, SPCE is agreeing to increase the number of shares on the public market through these sales. That could allow the agents to increase their stakes in the company while eroding the stakes of current investors.
It doesn’t appear that traders are overly pleased with this idea, as SPCE stock is falling 12.8% as of Friday morning. That comes as some 3 million shares change hands, as compared to a daily average volume of around 15.7 million shares.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
