Insights

Why Core Labs Stock Dived by More Than 10% Today

What happened

Few investors wanted to experiment with owning Core Laboratories (NYSE: CLB) stock on Thursday. That’s because the oil reservoir services company is digging for new financing, and those investors aren’t happy about this. As a result, Core Labs’ stock closed a bit more than 10% lower on the day.

So what

Core Labs said Thursday that it had launched an at-the-market (ATM) stock offering. Under this initiative, the company will sell up to $60 million worth of its common stock to the public. It will be aided in this effort by Wells Fargo and Bank of America Securities, both of which are to operate under an equity distribution agreement with the company.

In discussing the utilization of its share of the proceeds, Core Labs used the typical stock-issuer boilerplate language citing “general corporate purposes.” It added that these could include product/technology development, debt retirement, and possible acquisitions. 

According to data compiled by Yahoo! Finance, the specialty oil services company currently has slightly over 46.3 million shares outstanding. At the current stock price, that $60 million shakes out to roughly 2.2 million shares.

Now what

2.2 million shares being added to a bucket of more than 46 million isn’t particularly dilutive, so on that basis alone, investors seem to be over-reacting to Core Labs’ news.

But if we zoom out a bit on the company, we can see that there is some concern about how quickly its business is going to develop in the short to mid term. Investors also might be worried about a coming decline in the current high oil price, a dynamic that doesn’t favor a reservoir services provider like Core Labs. 

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Core Laboratories. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here To Get Started
FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here For More Info