May 16 2017

Why to Consider Secondary Stock Offerings?

When it comes to stock exchange, there are lots of opportunities that await beginner and professional investors. To earn money in this big game, you need to understand just how it works and how to build a trading system that will make you money. Among the many things that you can buy and sell in the stock market are secondary stock offerings.


If you are wondering what secondary stock offerings are, these are actually the stocks sold to the public by a company who has already done with their initial public offering or IPO. These are offerings made available in the secondary market.


Why do some companies sell their stocks as secondary public offerings? One of the best reasons for this is because they need cash to expand and grow their business. They can use the money after selling the stock to beef up their property, plant, and equipment to expand market share, or simply for research & development. Other company will choose to do this as well if they do not have money to acquire a smaller company that will establish their foothold in an emerging market.


Secondary stock offerings are also referred to as a security sale where a large amount of shares are sold by a major stockholder of a specific company. Obviously, the stockholder who owns the stocks will be the one to benefit from the earnings.


The reason why some stockholders of a company decide to sell their shares is to lessen or decrease their positions. This could be due to several factors like eventual resignation or relocation. It is a fact that companies can be highly volatile in the stock market and shareholders can have the option to either hold on or sell their stocks through such secondary offerings.


In spite of this, secondary stock offerings are still viewed as a way to fuel company growth. Through this, corporations can finance projects that can bring in revenue for the company in the long-term future. In short, this could be a way for them for achieve financial growth and business success.


Again, let it be remembered that secondary stock offerings are not meant to be a way of increasing stocks in the stock market. By selling these shares in the secondary market, there is no dilution of the existing number of shares nor are there any brand new shares be issued.


Another reason why veteran investors choose this kind of offering is the fact that they can gain the support of the brokers. Due to a large volume of secondary stock offerings issued every year, a trader can earn a lot even if there is only a little percentage for trade-off. Companies that issue this benefit a lot from the additional capital that is infused to the company. This fact alone is a very encouraging way to opt for secondary stock offerings. It serves as the answer for the financial problems of companies. Instead of resorting to the bank for a loan, secondary market offerings can help them push their business to the next level without the added pressure of incurring interest.


C.L. King & Associates is a full-service investment bank and self-clearing broker-dealer founded in 1972. We provide investment banking, equity research, sales and trading, and investor services to corporations and institutions. We transact directly in the capital markets on behalf of corporations through our Corporate Services business focused on share repurchase and continuous share offerings (“ATMs”). CL King is also a leading woman-owned securities firm and is WBENC-certified.
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