Profitability doubts after the IPO? Everyone in the world knew they were never close to profitability pre-IPO, this is just the reality of being a publicly traded not profitable company. Can't funding round yourself out of this one anymore.
They’ll say “saudi investors bought into secondary offering at X share price” instead of “round completed at Y valuation!!!” Which is just X share price of last purchase multiplied by total shares in existence
Public companies can do secondary offerings from treasury or from creating brand new shares from nothing (dilution)
Liquidity is one of the benefits
Planned payout is, and has been the same ever since limited liability companies were invented by humanity: excessive cash flows plus liquidation value of corporate assets at end of life. Hoping on anything else is speculation (nothing wrong with that, but it is just speculation, i.e. trying to sell to the greater fool).
If you take out a ton of debt while burning through cash reserves then your market price plummets. Same with issuing new equity, through dilution. At least pre-IPO, the investors could lock in favorable pay outs on their funding rounds - now this is all visible to the public investors.
I think Beyond Meat are currently demonstrating the perils of doing a secondary offering whilst the company is unprofitable.
so this is more of a hilarious red flag of incompetence, if one planned to add to a position in this
but it does the prove the point that the company and shareholders have many financing options: the issuer is unscathed here, they will create shares and exchange it for $50,000,000 or maybe $40,000,000 due to the 20% drop from announcing it, oh no. Those private shareholders are still planning to make 9 figures.