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Why Cambium Networks' Shares Plunged 15.7% on Friday

By Travis Hoium - Dec 4, 2020 at 1:36PM

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A big share sale left investors with a bad taste in their mouths today.

What happened 

Shares of wireless solutions company Cambium Networks ( CMBM -1.38% ) fell as much as 15.7% in trading Friday after the company announced a share offering. Shares remained sharply lower throughout the day and were down 14.1% at 12:45 p.m. EDT. 

So what

On Tuesday, Cambium's management said shareholder Vector Cambium Holdings intended to sell 2.5 million shares through an underwritten secondary offering. Underwriters would be given the option to purchase another 375,000 shares for 30 days, which is customary. 

Rural landscape with a large wireless tower.

Image source: Getty Images.

After the market closed yesterday, the company announced the pricing for the offering, which would be sold for $28 per share. Proceeds to Vector Capital would be about $70 million. 

Now what

The market's reaction today is because shares were sold at a discount to yesterday's closing price of $30.13 per share. It's not unusual for shares to be sold below the market's closing price because large sellers will take a lower price to offload a large number of shares. I wouldn't look at this as a reason to change your long-term investment thesis, but note that a big owner is jumping ship right now. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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