I pulled up Asana’s $ASAN page today because the price dropped, and saw that Public posted the update that its price pullback is due to a “mixed-securities shelf offering”: https://public.com/posts/2d54d15aa37c609c9a1947d326f6c8d23e292b6c. Hold the phone….what? Lemme find out why this matters because I have no clue what shelves they’re offering or what’s on them!
Next I ran a web search (or what a 99-year old I know calls "get it out of the Google") to do my own research— #dyor . Investopedia is one of my favorite educational resources for #newinvestors , or me 😜, but Public has a great learning section too that’s a little more digestible imo. ⤵️
According to Investopedia, “a shelf offering . . . allows a company to . . .
• “register a new issue with the SEC but allowing for a three year period to sell the offering instead of all-at-once . . .
• “adjust the timing of the sales of a new issue to take advantage of more favorable market conditions should they arise in the future.
• “[and maintain] any unissued shares as treasury stock, where they remain ‘on the shelf’ until offered for public sale.”
Hold the phone… that’s a whole lotta financial nonsense… all I wanna know is am I gonna lose money if I buy or #HODL the stock!? I bought $ARVL last year and they did something that sounds similar— a “stock dilution,” which according to Public Learn “refers to the decrease in value of each share outstanding due to the introduction of new shares.” So that’s why I lost a lot of my #unrealizedgains because “stock dilution can greatly decrease the value of an investment”!! I was up 20% and now I’m down -60%.
My takeaway on the similarity on both #shelfoffering and #stockdilution is that a company wants to raise money from its stock so that they can pay debts, invest in research and development, build new facilities, acquire startups that do something well and that they want right away— which $MSFT and other firms are regularly doing, e.g. $CRM .
My takeaway on the difference is that a #stockdilution is an immediate issuing of new shares on the stock market at market price, which might drop as a result; whereas a #shelfoffering increases the number of shares on a company’s terms with greater control on volume and, as a result, price because they can grab any amount “off the shelf” at a time and quantity of their choosing.
Using critical thinking, I deduce that a stock dilution means a company wants the cash NOW, whereas a shelf offering means a company thinks their stock will retain or increase in value and will want that cash LATER. I lose confidence in the diluted-stock company and have #fud that they might be struggling. I retain confidence in the shelf-offering company because they have time to collect share value cash, but I still have #fud because I don’t know what or when or why it’s going to happen just yet.
Either way, THAT’S probably why someone told me that psychiatrists and mental health professionals are allegedly good investors! #psychologyofmoney
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References:
• https://www.investopedia.com/terms/s/shelfoffering.asp
• https://public.com/learn/what-is-stock-dilution
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