Keith Noonan, The Motley Fool
3 min read
In This Article:
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Quantum Computing stock is falling today due to a new share offering and geopolitical risk factors.
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The company will raise $200 million by selling roughly 14 million shares at a price of $14.25 per share.
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Stock dilution and geopolitical factors could spur more volatility for the stock in the near term.
Quantum Computing (NASDAQ: QUBT) stock is seeing a round of substantial sell-offs in Monday's trading. The company's share price was down 10.6% as of 1 p.m. ET, amid gains of 0.7% for both the S&P 500 (SNPINDEX: ^GSPC) and the Nasdaq Composite (NASDAQINDEX: ^IXIC).
Quantum Computing opened today's trading with a valuation pullback due to news that the company is moving to issue and sell new stock. The bearish pressure has intensified following news of rising geopolitical risk factors.
Before the market opened this morning, Quantum Computing revealed that it had sold a significant amount of new stock through a private offering. Per the recent announcement, the company will be selling slightly more than 14 million shares of common stock priced at $14.25 per share to a group of institutional investors. The deal is expected to generate $200 million in cash for Quantum Computing, and the company plans to use the funds to accelerate its commercialization initiatives, facilitate potential merger-and-acquisition moves, and strengthen its overall financial footing. The new stock sale is expected to take place around June 24.
The announcement of Quantum Computing's upcoming stock sale has understandably raised concerns among investors. Even after a substantial sell-off today, the sale price for the 14 million shares of new stock is still roughly 16% lower than its current trading price. While it's not unusual for companies to offer stock at a discount when selling a large amount of shares through private placement, the deal highlights valuation risks and concerns.
In addition to stock dilution from the new share sale, geopolitical dynamics could be a significant source of volatility for Quantum Computing in the near term. Following a U.S. bombing strike on nuclear development facilities in Iran over the weekend, Iran is reportedly responding with missile strikes on U.S. bases in Qatar and Iraq today. As a growth-dependent stock with a speculative outlook, Quantum Computing could see outsized volatility if geopolitical conditions become increasingly unstable.
