ROKU down 6.5% this morning due to FUD? or legitimate concerns over dilution?
Could be a buying opportunity on the dip…
“… the company disclosed that selling stockholders would be reselling up to 571,459 shares due to an agreement reached when Roku announced its plans to acquire advertising-tech company Dataxu…”
Selling new shares is not FUD. It’s diluting existing shareholders. So a drop is expected. It is up to management to create value with the capital they raised with these new shares so if you believe management can justify the use of proceeds will more than offset the dilution this is a buy opportunity. I do like this acquisition more than the dilution caused by Twilio acquiring Sendgrid.
The amount of shares being offered is 1 M shares, less than 1% of the 117 M shares outstanding. Very small amount so I would say FUD. Very little dilution.
the company disclosed that selling stockholders would be reselling up to 571,459 shares
New shares cause dilution, selling stockholders’s shares don’t! Stockholders’s shares coming to market might increase the float which is not dilution. An increase of the float, creating more liquidity, might lower the price temporarily because there is a greater offer.
The two posts are actually speaking of different events. ROKU has applied to issue 1M shares of new common stock. This seems to be the reason for the price action today.
The company filing with the SEC is here
As McMealyFool has pointed out this is the likely reason for the Roku price drop.
At time of posting this message 3.30 pm ROKU is down only 3.4%.
Seems Steve Louden, ROKU’s CFO has sold $14.9 million worth of shares as well as per Benzinga.
And today ROKU is over $159 again…short -term FUD