Shares of EVgo (NASDAQ:EVGO) 2nd August, 2021 plummeted by 15%, after the firm did regulatory filing for registering millions of shares for issuance in relation to warrants exercise. The filing comes a month later post the electric vehicle charging network did merger with special-purpose acquisition company.
The firm has registered about 18.1 million new shares, which can be issued on exercise of public warrants. EVgois also registering another 52.35 million shares, which may be sold by existing shareholders and also 6.6 million private warrants. New issuance of shares pertaining to warrant exercise may be dilutive to existing investors.
SPAC generally has warrants as an additional bonus for investors. Derivate gives warrant holder to purchase shares at exercise price of $11.50. Operating the largest network of fast-charging in US, the company has tied up with auto company GM and will only get proceeds of warrants exercised.
SPAC may redeem outstanding warrants for $0.01 once securities become exercisable, that may prompt warrant holders to risk losing their entire investment.
The key criteria is that the stock must trade at $18 for 20 trading days within a 30 trading-day period. It is estimated that about 264.5 million shares were outstanding as of July 1, hence 18.1 million new shares will be roughly 7% dilution.
The stock has lost over 25% in the past week and made a new low of $8.77 in today’s trading session.
