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Why Uranium Energy Stock Crashed 11% Today

By Rich Smith - Updated Mar 17, 2021 at 2:02PM

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The company is selling stock, and buying uranium.

What happened

Yesterday, Uranium Energy (UEC 4.75%) announced that it had amassed $65.8 million and plans to spend $10.9 million of that to buy 400,000 pounds of uranium on the open market, which helped propel its stock up as much as 35%.

But today, news that the uranium miner is amassing even more funds and buying even more uranium is sending Uranium Energy stock back down, and it was off 11.1% as of 12:30 p.m. EDT.  


Image source: Getty Images.

So what

This morning, Uranium Energy reported that it has just ordered 800,000 more pounds of uranium. Combined with the 400,000 pounds previously secured, it is now contracted to spend nearly $35 million to acquire 1.2 million pounds of the stuff.

To help fund these purchases, the company has also announced a sale of 10 million new shares of stock at $3.05 per share, resulting in gross proceeds of $30.5 million before fees and costs.

Now what

Once both these purchases have entered into effect, Uranium Energy says it will have "approximately $95 million of cash, equity and inventory holdings, including approximately $35 million of U.S. warehoused uranium" on its balance sheet. That's the good news.

The bad news is that the stock offering to help amass this hoard requires diluting existing shareholders by about 4.8% and selling those extra shares at a 5.6% discount to Uranium Energy's Tuesday closing share price.

And it's the bad news that has investors treating Uranium Energy stock like it's radioactive today.

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