The season of catalysts isn’t over for Greenidge Generation (NASDAQ:GREE). The sustainable energy company, which has been expanding its reach into the field of crypto mining, has announced another public offering, this time consisting of $40 million of senior unsecured notes. This news has led to a turbulent day for investors, as GREE stock was quick to rise as markets opened but even quicker to start moving in the opposite direction.
What Happened With GREE Stock
This morning saw GREE stock off to a good start, rising by 3.7% within the first hour of trading. However, it then began to decline, sliding by almost 7% from its earlier peak. As of this writing, shares are down 3.69% for the day and show no signs of regaining upward momentum.
October isn’t off to a good start for Greenidge. The company is also still down more than 50% since closing its reverse merger on Sept. 15. Many analysts touted GREE stock’s potential, but it is clear that the company has needed time to gain real market momentum.
What It Means
It’s not uncommon for share prices to fall when a company makes this type of offering. This type of outcome is particularly common if investors are unsure of the reason behind a company’s decision to raise cash.
While the company’s issued statement noted that the funds raised would be use for “general corporate purposes, including funding capital expenditures, future acquisitions, investments and working capital and repaying indebtedness,” it’s easy to see why such a general statement might not be comforting to investors. Additionally, as Investopedia notes, sometimes investors worry that these financing options could lead a company to take on excessive debt.
That said, this isn’t necessarily a reason to panic. Greenidge received a considerable amount of media attention prior to its merger. But after GREE stock trading began, shares were quick to decline, and they haven’t rebounded since. This could simply be a sign that Greenidge is hoping to leverage interest in its business to raise money and fuel future growth.
Why It Matters
Even with the recent declines, investors have always had plenty of reason to regard GREE stock through a lens of cautious optimism. Efforts to expand crypto mining operations are underway and such an initiative requires considerable financial resources.
Just last week, an analyst prediction set a price target for GREE stock to hit $78 due to the process it was undertaking to scale mining operations. The reasons for growth that he laid out haven’t changed. If anything, this current dip should serve as a reason to watch GREE stock carefully. The company clearly believes that this new offering will net it the cash it needs to move forward and for the stock to move up.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.