The stock price hasn't gone the way I'd have liked over the past couple weeks, but that's no reason to get on your case. Congratulations on calling it and making a good trade. Maybe at some point PR will come out that persuade you to come in as a long.
Budget deal announced. Full offering (plus oversubscription) confirmed (though we all suspected it). By this time next week, probably have passed the budget deal, and will have additional information about taper/Fed.
It's not the same as a press release saying: "We're selling $XX to Apple." or "We're using the capital raise for XYZ." But it is good to have some uncertainty removed.
I should have read your post a bit more carefully. I apologize for that.
If GTAT is able to deliver/participate in a graphene manufacturing process that is cost-efficient, and graphene delivers on its promise, it may dwarf everything else we're talking about. That's not to be frothy, it's just an eye-poppingly large potential market.
At risk of sounding full of cr@p, I was hoping that the raise was to acquire some technology to develop in the graphene/carbon nanotubes space. Maybe it's still early on, but there's a decent case that that is a nice next step for some of GTAT's markets.
If I were in charge, and the price dropped this much, and I didn't already have the raise earmarked for something, I'd buy back the $9.93 warrants. It would likely cost about half of the total raise, and would duck 28.5 million of dilution. They could then refinance the first convertible closer to expiration and potentially have a share buyback effect at that point (by also exercising the options/hedge they entered for the first convertible).
I'm not suggesting that this is what they're doing. Just that it is one option.
I also think you're slightly misrepresenting their financial position by picking certain metrics (GAAP earnings) and ignoring others (operating cash flows).
I just thought it would be very nice if they managed to shed that, swap 28.5 million of potential dilution for 24.5 million of potential dilution and maybe net some cash to boot. Who knows, but I figure they could have done the offering figuring one of two things would happen: either the stock gets pounded, and they clear the earlier bond, or the stock doesn't, and they have more cash without taking a hit.
Looking forward to more news, either way.
Is it possible that GTAT could be buying back the 2012 convertible with some of the new cash? I always thought they needed to announce it if they were planning a share buyback, but that they didn't need special permission/filings to buy bonds on the open market.
Maybe just a fantasy.
Thanks. I thought it was curious that none of the financial blurbs had shown it. Would have preferred higher, but $12.11 isn't terrible.
They list the contemplated value of the share sale based on $9.81/share (the close November 29th). It would be nice if that turns out to be the price.
If the Apple deal allows them to accelerate this upgraded technology, is it conceivable that the raise is for working capital to build these furnaces for some big LED maker or similar?
You're right. I should have been clear that I agree with you about the dilution - clearly there is dilution, and anxieties about that dilution won't go away until someone knows what that money is going to be used for.
I don't entirely agree about price, though. If there is someone who wants to take a large stake relatively quickly they may pay market value or even a premium for the ability to buy it all in one. The alternative being that in a closely-held issue, buying 2-6x daily volume might move the price. I'm not saying this is what's happening here, but it can and does happen.
Assuming increasing share count by 10% will reduce price by 10% (actually, the correct number is 9.1%) overlooks that selling those shares brings in cash. The incremental cash per share partially (or, if there are exceptional growth opportunities through investment, more than) offsets the dilution. Yes, your shares only own 90.9% of the core business that they did pre-offering, but they also own 90.9% of the cash raised.
Anyone know how long it usually takes from announcement of a deal like this until closing? For my part, I will be glad to know what the pricing is, or, at least, will be happy to have the uncertainty removed.
Anyone else seen the Forbes, etc. pieces speculating that China Mobile is accepting reservations from some of its customers for iPhones? Would this be enough volume to justify a capital raise? It seems like a lot, but not enough to me, so I'm still speculating something else is up.
Incidentally, the first time the share issue news showed up on Google Finance, it was carried by MENAfn (Middle East and North Africa finance network). Could just be a funny coincidence, but it got me a little excited about Saudi Arabia. One can hope...
What I'd really like to see is a press release like: "Our nerds just ran the Hyperion and... holy !%^# did it run well! It's ready for full roll-out." I don't think that article happens (yet), but I'd get a real kick out of it.