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Why IronNet Plummeted Today

By Eric Volkman – Updated Sep 24, 2021 at 10:47AM

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A complicated set of share/warrant issues is making investors unhappy.

What happened

One of the more up-and-down stocks in recent months, cybersecurity specialist IronNet (IRNT -8.31%) lost more than 19% of its value on Thursday. The culprit seems to be a new share issue announced that morning by the company.

So what

IronNet disclosed in a regulatory filing that it and certain selling shareholders are floating a multifaceted issue of common stock, in addition to warrants to purchase same.

A bunch of $100 bills arranged haphazardly.

Image source: Getty Images.

The first component is a stock issue totaling more than 13.8 million shares. These shares back two issues of warrants

The second component is a stock and warrant sale, which will take place from time to time, by a group of IronNet shareholders. This comprises a pile of just over 64 million shares, some of which would derive from warrants.

The cybersecurity company will reap funds only from warrants exercised for cash. The company said it would receive up to roughly $159 million if all of the warrants were exercised for cash.

Now what

IronNet wrote that it would use any net proceeds "for general corporate purposes, including to fund potential future investments and acquisitions of companies that we believe are complementary to our business and consistent with our growth strategy." It didn't elaborate.

The company's flotation of 14 million shares that will potentially arrive on the stock exchange, plus the shifting of a big chunk of IronNet's existing shares, are clearly making investors jittery. Hopefully for them, the company will put the funds from its own flotation to good and productive use.

Editor's note: The language in this article has been corrected. 

Eric Volkman 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.

Stocks Mentioned

IronNet, Inc. Stock Quote
IronNet, Inc.
$0.36 (-8.31%) $0.03

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