What happened

Shares of Qutoutiao (NASDAQ:QTT) fell 10.9% on Wednesday after the Chinese mobile content aggregator announced a dilutive, upsize secondary offering priced at $10 per share -- an 8.1% discount from yesterday's close.

More specifically, Qutoutiao priced an offering of 3,357,868 American Depositary shares -- every four of which represent one Class A ordinary share -- and 6,672,132 ADS from several selling shareholders, for a total of just over 10 million ADS. The underwriters of the offering also have a 30-day option to buy up to 1.5 million additional ADS from the company.

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IMAGE SOURCE: GETTY IMAGES.

So what

For perspective, when Qutoutiao initially proposed this follow-on offering last Friday, the company told investors it expected to offer a total of 8.5 million ADS, including roughly 1.05 million from the company and approximately 7.45 million from the selling shareholders. The stock fell 8.7% on Monday in response. 

Still, in addition to the unfavorable pricing relative to yesterday's close, this upsize offering of 10 million shares represents a hefty increase to the company's current 76.5 million-share float

Now what

It's also worth noting that Qutoutiao will not receive proceeds from the shares offered by the selling shareholder group. But the proceeds the company does receive from its own offered shares will be used "for general corporate purposes" -- a fairly common designation for yet-to-be-profitable businesses like Qutoutiao in these early stages of its long-term growth.