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Why Impinj Stock Popped Again Today

By Rich Smith – Nov 2, 2021 at 1:26PM

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Impinj is taking on some debt. Hooray?

What happened

Shares of radio-frequency identification specialist Impinj (PI 2.94%) are notching strong gains Tuesday afternoon, up 6% as of 12:35 p.m. EDT and extending the stock's strong momentum following last week's earnings beat.

So what

So why is Impinj stock rising this time? Well, last night after close of trading, the company announced that it is offering $225 million worth of convertible senior notes due 2027 for sale, and potentially nearly $260 million if underwriters exercise their overallotment option.  

Granted, seeing a company take out tens of millions of dollars' worth of debt isn't ordinarily something you'd call good news, but in this case it probably is.

As Impinj explained in its press release, it intends to use "a significant portion" of the cash from this new debt offering to roll over old debt.

Arrow angles up on a green stock chart.

Image source: Getty Images.

Now what

Not all the details of this transaction are clear just yet. Notably, Impinj said in a press release that the "interest rate, conversion rate and other terms of the notes are to be determined upon pricing of the offering." What is clear is that the company intends to pay off much of its convertible senior notes due 2026, which cost the company 2% in interest annually.

Now, 2% isn't a lot, but even so, presumably, the new debt the company is taking on will cost even less -- and extend its deadline for repayment by another year. And the company said it thinks it might have a little bit of cash left over to use "for general corporate purposes."

On balance, therefore, this new debt offering actually is good news for Impinj -- and that's why the stock price is going up, not down.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.

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