Thread by @stomping_llama

There's a big difference between an "at-the-market offering" (ATM) and an offering that's "priced at-the-market." An ATM offering isn't fixed in size (up to the amount registered) or price, and they might never sell any shares. 🧵 #pennystocks #dilution

ATM: An investment bank sells new shares directly onto the market on behalf of the company, for a commission (typ. 3%.) There's no telling if or when the ATM will be used, but they'll of course get market pricing at that time, just like when you or I sell shares.

An offering that's "priced at-the-market" is a deal that's already been agreed to, but they're basically explaining that they priced and sized the offering within the parameters of Nasdaq or NYSE's rules. It's not necessarily the minimum allowed price, either.

"Priced at-the-market" pertains to private offerings (PIPEs,) registered direct offerings (RDOs,) and sometimes public offerings (if there's a chance the exchange might determine the "public" offering wasn't so public after all.)

The exchanges set minimum pricing rules for non-public offerings, where the company is selling more than 20% of their outstanding shares. If such an offering were priced at a discount to market price, shareholders would need to vote to approve the offering (a tough ask.)

Here's Nasdaq's Rule 5635(d,) where their minimum pricing is explained.

NYSE's rules are basically the same. These are two excerpts shown together for context.

These offerings aren't shares sold on to the market - the shares don't hit the market unless/until the investors resell them. In the case of PIPEs, they can't sell until the shares are either registered in a prospectus, or they've held the shares for six months.

That being said, the EQUIVALENT of those shares could already be on the market, in the form of borrowed shares. It's legal for a short-seller to cover with shares purchased in a non-public offering. Sometimes, the companies will explicitly acknowledge this might be the case.

If the investors were short, the silver lining is that there won't be downward pricing pressure when they "sell" the shares - they'll be wash selling from long account to short account. On other hand, the purchase wouldn't signal a vote of confidence in the stock going forward.

Did institutions short millions of $LIXT shares in the $2.50-$5.00 range April 12th, only to make a deal that day with the company to buy 2.9m shares to cover at $2.00? Can't say for sure, but definitely... maybe 😉 Any offering above $1.10 would have been "priced at-the-market."