Please ensure Javascript is enabled for purposes of website accessibility

Why Schrodinger Stock Dropped 9% Today

By Rich Smith – Feb 10, 2020 at 6:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This IPO has been a success regardless.

What happened

New IPO Schrodinger (SDGR 6.51%) saw its stock dropped for a 9.3% loss on Monday. There was no news to explain it, and that's OK.

If you haven't heard about it yet, Schrodinger uses physics-based software to help researchers discover high-quality, novel molecules for drug development and materials applications.  

IPO in letter blocks

Image source: Getty Images.

So what

Schrodinger priced its IPO at $17 a share on Wednesday, and immediately shot off to the races. Shares of the software maker closed their first day of trading up an astonishing 68% and climbed even higher to close the week at $31.92 on Friday.  

So even after dropping 9.3% today, early investors in Schrodinger have cleared a 70% profit on their initial investment -- not bad for three days' work. Fact is, Schrodinger stock was probably due for a bit of a breather, as elated early investors cashed in some of their gains.

Now what

As for what comes next, that's not at all clear. Schrodinger is so new to the public markets that, so far, most of Wall Street remains gagged and unable to comment on the stock's startling rise due to quiet periods imposed on the underwriters.

What we do know is that in addition to the nearly 12 million shares that Schrodinger initially planned to sell in its IPO, underwriters exercised overallotment options to snap up a further 1.8 million shares -- so that Schrodinger ended up floating 13.7 million shares in all, and raising $232.3 million in gross proceeds before underwriting discounts and commissions and offering expenses payable by the company.  

For a company that's still burning $26 million in cash flow annually at last report, that extra cash will come in handy.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Schrödinger, Inc. Stock Quote
Schrödinger, Inc.
$25.69 (6.51%) $1.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.