PFIE - Here’s what’s going on:
They are offering 6.0 million shares, 4.5 million by the company and 1.5 million by stockholders. With a standard over allotment of 15% or 900,000 shares. The extra 900,000 shares will ALL come from stockholders, and will be non-dilutive. The Company expects to receive net proceeds of approximately $16,430,000 after deducting underwriting discounts and commissions.
Why are they selling it so cheap? - They are a tiny company and they are getting ripped off by the underwriters of the sale. They have no pull so the underwriters can force them to sell cheap if they want to raise cash.
Why are the insiders selling some of their stock? - Because they own almost all of it, and want to diversify, or buy a house, or send their kids to college, or buy a Tesla.
Why do the underwriters force them to sell cheap? - First so they can buy a part of the shares cheap for themselves. Second so they can give their own favorite clients a bargain, and keep them happy.
Why is the price down today? - The underwriters’ clients, who are promised cheap shares, don’t know beans about PFIE and don’t care. Joe Blow, who is promised 20,000 shares tomorrow at $4.00, sees PFIE at $4.60, or $4.50, or whatever, and sells his 20,000 shares short at that price, knowing that he’ll cover his short tomorrow with the shares he gets at $4.00. So he makes a fast profit of 50 or 60 cents in one day. Probably EVERY ONE of the underwriters’ clients is doing that, which is why the volume is so high.
Why then, doesn’t the price go right down to $4.01 or $4.02, with all these guys selling their shares short? I see that it’s at $4.25. - Because lots of intelligent investors like you and me, seeing what’s going on, and knowing that $4.25 is a bargain price for PFIE, and that in a week or less the price should be way back up, are buying at $4.25.
Hope that helps.