Sidus Space gears up for another public offering; stock prices drops

Sidus Space filed another registration statement with the SEC on October 15th announcing intention to sell up to 3,745,318 new shares. With 4,081,344 shares outstanding, this equates to existing shareholder ownership being diluted in nearly half! Sidus stock (NASDAQ: SIDU) dropped 16% in trading on Tuesday following the announcement.

In the registration statement risk section, Sidus Space warns this public offering could cause its stock price to decline. Investors would likely be wise not to ignore this warning.

Per the registration statement, the “assumed public offering price” is $2.67. However, “the actual public offering price […] may be at a discount to this assumed offering price.” Due to Sidus Space’s shares trading at $2.21 as of Tuesday’s close, it highly unlikely anyone will buy shares at $2.67 from Sidus’s underwriters. Thus the actual public offering price likely will be well south of the current price at time of offering. Quick flipping by buyers will likely drop Sidus’s stock price further when they seek to quickly resell after buying shares at below market rate.

For this offering, Sidus Space engaged ThinkEquity LLC again as “representative of the underwriters.” No other specific underwriters are disclosed. However, the fee is 7%. Expense will cost Sidus up to another 1%. ThinkEquity’s BrokerCheck Report with FINRA has multiple disclosure events, including two fines related to private placements. 

Sidus Space’s actual public offering price seems much more likely to be closer to (or less than) $2.00 than $2.67.  Assuming $2.00 price and placement of the full 3.7 million shares, after fees Sidus Space stands to raise about $6.8 million. Baring cash influx from Lizziesat-1 revenue (which seems very unlikely), $6.8m provides about two quarters worth of cash to Sidus at current burn rate. Thus shareholders should anticipate another dilutive financing round again. And further stock drops.