Horizon Technology Finance's stock experienced a significant drop today.
**Horizon Technology Finance Corporation Announces Capital Raise Amidst Financial Challenges**
Horizon Technology Finance Corporation (HRZN) has announced a new capital-raising initiative, selling 3.25 million shares of its common stock at a price of $12.50 each. The underwriters for the current issue include Morgan Stanley and Wells Fargo Securities, who also hold an option to buy up to 487,500 additional shares collectively.
This move comes amidst a challenging financial period for HRZN, with the company reporting a significant decline in earnings and a substantial negative net income over the past year. As of the latest information, HRZN reported a trailing twelve months (TTM) net income of -$35.72 million and a TTM revenue of $98.30 million, which is down from previous years.
The share price of HRZN has also been affected, with a 37.6% price drop over the past year. The company's stock price has been volatile, with a 52-week range of $7.09 to $12.63. The current stock price is around $7.37 to $7.54, reflecting ongoing market volatility and investor concerns about its financial health. The company's dividend yield is high at 18.06%, but the dividend payout ratio is negative, indicating potential sustainability issues.
The proceeds from the current issue are intended to be used to retire debt from a revolving credit facility. However, the investment goals for the current issue have not been disclosed in detail. It's worth noting that the current issue is larger than the one in March, making it more dilutive to existing shareholders.
The announcement was made after hours on Tuesday, and the news was not well-received by all shareholders due to its dilutive nature. The share price closed the day down by more than 12% following the announcement.
In March, Horizon floated a 2.5 million-share secondary stock offering with similar aims for the raised proceeds. The underwriters for that issue were also Morgan Stanley and Wells Fargo Securities.
In conclusion, the need to raise capital and the impact on share price are likely linked to HRZN's financial struggles and market perceptions of its future prospects. Potential investors are advised to conduct thorough research and consider the company's financial performance and outlook before making investment decisions.
[1] Source: Yahoo Finance [2] Source: Nasdaq
- Given the financial challenges Horizon Technology Finance Corporation (HRZN) is facing, this current capital-raising initiative, involving the sale of 3.25 million shares of common stock, may indicate a strategic move to strengthen its financial position through investing in key areas of the business.
- The decision to raise additional capital through investing in new shares comes as HRZN reports a decline in earnings and negative net income over the past year, with troubling financial indicators such as a high dividend yield and a negative dividend payout ratio.
- As potential investors, it is crucial to closely analyze HRZN's financial health, including its debt retirement strategy and outlook for future profitability, before making any investment decisions regarding this new capital-raising initiative.
