Shares of Materialise (NASDAQ: MTLS), a provider of 3D printing software and services, dropped 10.7% in June, according to data from S&P Global Market Intelligence. The catalyst for the decline was the Belgium-based company's announcement that it was issuing additional American depositary shares (ADS) to raise cash.
For context, the S&P 500 index returned 2.3% last month, while shares of fellow 3D printing companies 3D Systems and Stratasys rose 35.9% and 12%, respectively.
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On June 10, shares of Materialise plummeted 18.3% following the company's announcement of a public offering of 4.0 million to 4.6 million ADSs at $24 per ADS. In Belgium, each ADS represents one share of common stock.
Investors don't like it when their ownership of a company is diluted -- and the dilution here is up to about 7.9%. Moreover, the offering price of $24 was 14.3% below the stock's closing price on the day prior to the announcement. So, it was to be expected that the stock would drop on the news. (Not surprisingly, the stock's most recent closing price was very close to the new offering price; it was $24.05 on Friday, July 2.)
The glass-half-full take is that the offering should raise proceeds of about $96 million to $110 million less costs associated with the offering. That cash could almost entirely pay off the company's debt, which was $110.4 million at the end of last quarter. Of course, the company could also want to have more cash on hand so it could pounce on an attractive acquisition candidate.
Materialise isn't currently profitable nor expected to be for full-year 2021. However, Wall Street expects the company to return to profitability, on an adjusted basis, next year.
The stock deserves a place on 3D printing investors' watch lists, as I recently wrote in an overview of 3D printing stocks as the end of the first half of 2021 approached.
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