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Why Orbital Energy Group Shares Plunged Today

By Travis Hoium – Jul 21, 2021 at 2:54PM

Key Points

  • A big stock offering is sinking shares today.

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It's surprising the stock isn't down even further.

What happened 

Shares of energy stock Orbital Energy Group (OEG 2.15%) fell as much as 19.1% in trading on Wednesday after the company announced a share offering. Shares, which have held fairly steady all day, are down 18.5% at 2 p.m. EDT. 

So what

The biggest news is that Orbital Energy agreed to sell 10.4 million shares of stock to institutional investors for $3.65 per share. That's still below where shares are trading today, providing new investors with a big discount on the stock.

Solar farm in a field at dusk.

Image source: Getty Images.

Management expects the offering to close on Thursday, and until at least then, I wouldn't expect the stock to jump. Orbital Energy may just need the company to survive after reporting an $18 million loss in the first quarter of 2021 and having just $34.9 million in cash on the balance sheet.

Now what

Orbital Energy is a long way from profitability, and that's one of the reasons it needs to raise cash. While I like some of the markets the company is in -- like solar, natural gas, and electricity transmission -- it hasn't proven the ability to make money. That alone will keep me out of the stock, even with the discount in shares today.  

Travis Hoium 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.

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