June 25, 2024


Epicurean computer & technology

Why Shares of Horizon Technology Finance Corp Are Falling

2 min read


What happened

Shares of the specialty financing corporation Horizon Know-how Finance Corp (NASDAQ:HRZN) traded just about 11% reduce as of 1:28 p.m. ET following the company announced the pricing of a general public providing of typical inventory.

So what

Horizon Technologies programs to challenge 2.5 million shares of prevalent stock at $14.35 for each share, elevating gross proceeds of almost $35.9 million. Underwriters will also have the alternative to purchase an extra 375,000 shares of frequent stock in excess of the following 30 days when the offering closes on March 14.

Horizon plans to use proceeds from the presenting to repay excellent credit card debt underneath its revolving credit score facility. Then Horizon will reborrow resources from that facility to use for general company reasons and pay for operating fees and other income obligations.

Red line with arrow moving downward.

Impression source: Getty Photos.

Now what

It really is not stunning to see Horizon having a hit right now since issuing extra shares of prevalent stock dilutes shareholders, which in essence indicates they personal a smaller share of the in general pie and thus will obtain a more compact piece of earnings.

That explained, the current supplying of $14.35 is now decently about First Horizon’s latest inventory price of $13.25. 

Also, Horizon is mostly in the business of generating secured financial loans to undertaking-backed begin-ups. Whilst better curiosity prices will make the price of performing business for earlier-stage corporations much more high priced and perhaps bring down valuations, VCs just elevated a record amount of money of dry powder in 2021.

Buyers in 2021 raised a staggering $128.3 billion in new funds, surpassing the $100 billion threshold for the initial time at any time. Although the community tech markets have been a mess in modern months, I still assume buyers will want to deploy all of that money, building a probably excellent opportunity for Horizon. The firm also pays an exceptionally interesting 9% dividend produce at present concentrations.

This write-up signifies the opinion of the author, who may perhaps disagree with the “official” suggestion place of a Motley Idiot quality advisory services. We’re motley! Questioning an investing thesis — even a single of our possess — allows us all think critically about investing and make conclusions that enable us develop into smarter, happier, and richer.


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