Red Cat Holdings Inc (NASDAQ:RCAT) Stock Slumps After The News: A Good Buy Now?

Red Cat Holdings Inc (NASDAQ:RCAT), which has made its name as a technology support provider for the drone industry, saw its stock go into a negative spiral yesterday.

The Red Cat stock tanked by as much as 42% and the sharp decline in the stock may have been related to the announcement of the pricing of its underwritten public offering on Sunday. The company announced that in the aforementioned offering, 13,333,334 shares of the Red Cat common stock are going to be offered at $4.5 each and it is going to generate gross proceeds of around $60000000. However, offering expenses, discounts and commissions are going to be deducted from that amount.

However, that is not all. Red Cat also offered the underwriters for the offering an a 45 day option by way of which they will be able to pick up as many as 2,000,000 shares of the company’s common stock in order to cover overallotment. It will be made available at the same offer price but an underwriter’s discount is going to apply. It seems that the details of the offering have not created much excitement among investors and it led to a strong selloff in the Red Cat stock yesterday.

Market Reaction:

On Monday, RCAT stock slumped 42.25% at $4.10 with more than 15.66 million shares, compared to its average volume of 2.69 million shares. The stock has moved within a range of $3.6800 – 4.4100 after opening the trade at $4.37. Over the past 52-week, the stock has been trading within a range of $0.5400 – 7.7500.