Offerings · Guide

Understanding Stock Offerings

When a public company sells shares — whether for the first time or as an existing company raising more capital — it must file with the SEC. Different offering structures signal different things for traders and investors.

Offering Types

Secondary

Secondary Offering

An existing public company sells new shares to raise fresh capital. These shares did not previously exist — they are newly created, which dilutes existing shareholders. The proceeds go to the company.

Who is selling

The company itself. Cash goes onto the balance sheet for operations, debt paydown, or acquisitions.

Price impact

Usually priced at a 3–8% discount to the prior close. Stock often drops to the offering price on announcement day.

The floor

The offering price is the strongest near-term support. Underwriters actively defend it in the days after pricing.

ATM

At-the-Market (ATM) Program

A company registers a pool of shares (e.g. "up to $200M") and then sells them gradually into the open market over weeks or months through a broker-dealer, at prevailing market prices. There is no single offering price — shares drip out continuously.

Subtle dilution

No single day shock. The stock slowly bleeds from constant selling pressure, especially on up days when the company opportunistically sells.

Red flag sizing

A $50M ATM on a $100M market cap company is devastating. On a $5B company it barely matters. Always compare ATM size to float.

The floor concept

No single floor price since shares sell at market. Instead, track how much of the ATM capacity has been used — the remaining overhang is the real risk.

Shelf

Shelf Drawdown

A company pre-registers a large pool of securities with the SEC via an S-3 filing. Later, when market conditions are right, it "draws down" from that shelf — selling a specific amount at a specific price in one transaction. Think of it as a pre-approved credit line that the company taps opportunistically.

Speed advantage

Because the shelf is pre-approved, a drawdown can be executed overnight. The market often wakes up to the news already done.

Also covers bonds

Large companies (Alphabet, Merck, Goldman) frequently file 424B5 for debt offerings — bonds or notes. These have no dilutive equity impact.

The floor

Equity shelf drawdowns at a fixed price create a hard floor, same as a secondary offering. Bond drawdowns have no floor relevance.

PIPE

PIPE — Private Investment in Public Equity

A PIPE is a private placement — shares sold directly to a small group of institutional investors at a negotiated price, bypassing the public market entirely. The deal closes before the public knows anything. Disclosure comes via an 8-K filed after the fact.

Discount to market

PIPEs typically price 10–30% below market. That discount is the new floor — the institutional buyers won't sell below what they paid.

Surprise factor

Unlike public offerings, there's no roadshow or advance notice. The 8-K hits overnight. Stocks often gap down sharply on open.

Serial PIPEs = red flag

A company doing multiple PIPEs in one year is burning cash faster than expected, forced to sell at discounts to survive. Bearish pattern.

SEC Filing Types

424B4

Firm-Commitment Prospectus

The final prospectus for a firm-commitment offering — IPOs, follow-on secondaries, and large shelf drawdowns where investment banks commit to buying the entire offering at a fixed price. The offering price listed is the hard floor level.

424B5

Prospectus Supplement (Shelf / ATM)

A supplement to a previously filed shelf registration (S-3). Used for ATM programs, smaller shelf drawdowns, and bond/note offerings by large companies. When a specific price appears in a 424B5, it's a hard floor. When no price appears, it's typically an ATM or bond offering.

8-K

Current Report (PIPE Disclosure)

PIPEs are announced via 8-K since there is no public prospectus. The 8-K will reference a "Securities Purchase Agreement," "Subscription Agreement," or "Private Placement" and disclose the price per share and number of shares sold. We detect these automatically from the filing text.

Primary vs. Secondary — The Most Misunderstood Terms

"Secondary offering" is one of the most misused terms in markets. It can mean two completely opposite things depending on context — and the difference matters enormously for how you interpret the filing.

Note: Public Offering and Primary Offering are the same thing — just different names. "Public offering" is the common market term you'll hear on CNBC. "Primary offering" is the legal term used in SEC filings and prospectuses. Both mean the company is selling newly created shares to raise fresh capital. You will see Public Offering as the type label on this site.

Term	Who is selling	Proceeds go to	New shares created?	Dilutive?	Signal
Primary Offering	The company	Company balance sheet	Yes	Yes	Company needs capital — could be growth or distress
True Secondary	Existing shareholders (insiders, VCs, PE)	The sellers	No	No	Insiders cashing out — bearish sentiment signal
Mixed Offering	Both company and existing shareholders	Split between both	Partially	Partially	Most common structure — read the prospectus for split

Why the floor still applies to a true secondary

Even though no new shares are created, the offering is priced at a discount. The institutions who bought at that price won't sell below their cost basis — so the floor holds regardless of whether it's primary or secondary.

How to tell which type it is

Look at the 424B4 prospectus cover page. It will say "X shares offered by the Company" (primary) and/or "Y shares offered by the Selling Stockholders" (secondary). The AI summary on each filing captures this distinction.

The Floor Price Concept

The offering price is one of the most reliable near-term support levels in technical analysis. Here's why it works:

→ Underwriters defend it. Investment banks that bought the offering at $20 will not let the stock trade below $20 in the days after the deal — it destroys their reputation with investors.
→ Institutional buyers don't sell below cost. The pension funds, hedge funds, and mutual funds who participated at $20 have a cost basis there. They will buy more before they sell at a loss.
→ It's a known level. Every trader watching the stock knows the offering price. Visible support levels become self-fulfilling.
→ When it breaks, it's meaningful. If a stock closes below the offering price, it signals institutional selling — the underwriting syndicate has given up defending it.

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