New IPO Schrodinger (NASDAQ:SDGR) 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.
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.
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.