Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why Cobalt International's Shares Plunged

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Cobalt International Energy (NYSE: CIE  ) fell as much as 11% today after the company announced a debt sale.

So what: The company announced after the market closed last night that it will sell $1.2 billion of convertible senior notes due 2019. Today it priced those bonds with a 2.625% interest rate and gives the holder an option to convert a $1,000 bond into cash, 28.023 shares of stock, or a combination of the two.  

Now what: The conversion price is $35.68 per share, which is much higher than the price today, but it essentially dilutes upside for investors. The market is simply responding to this dilution since the stock is still a speculative play and bullish investors are looking for the upside anyway. This takes some of the air out of Cobalt for equity investors, and while the move doesn't change the overall investment thesis, it limits the upside somewhat.

Interested in more info on Cobalt International Energy? Add it to your watchlist by clicking here.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2151013, ~/Articles/ArticleHandler.aspx, 10/28/2016 5:50:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,161.19 -8.49 -0.05%
S&P 500 2,126.41 -6.63 -0.31%
NASD 5,190.10 -25.87 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/28/2016 4:00 PM
CIE $0.98 Down -0.08 -7.58%
Cobalt Internation… CAPS Rating: **