Shares of Vuzix Corporation (NASDAQ:VUZI) slumped on Thursday, falling 10% as of 11:09AM EST, following the announcement of a dilutive equity offering.
The smart glasses maker priced 3 million shares at $10.00 apiece, which was below the $10.80 per share where the stock closed yesterday. In addition, the company offered 1 year warrants to purchase an aggregate 1,200,000 shares of its common stock at $10.00 per share, and will be immediately exercisable for a period of one year.
In addition to that discount, the offering represents at least 12% dilution for existing shareholders.
That said, the offering did raise $30 million (before deducting commissions and estimated offering expenses), which will allow the company to expand its product offering and the commercial launch of its Blade Smart Glasses, featuring its proprietary waveguide technology products and for general working capital purposes.
Vuzix CEO Paul Travers commented, “This financing significantly improves Vuzix’ balance sheet and helps ensure that the Company has sufficient operating capital to execute on its aggressive business plans while also putting Vuzix in a stronger position to effectively negotiate and conclude discussions with potential licensing and strategic partners […] With all the increased business activities from the recent launch of the Vuzix Blade and the growing deployments around our workhorse M300, the response from both consumer and enterprise segments has been overwhelming. As a result, we felt that it would be prudent to strengthen our balance sheet.”
On the ratings front, Vuzix stock has been the subject of a number of recent research reports. In a report issued on January 8, Craig-Hallum analyst Christian Schwab initiated coverage with a Buy rating on VUZI and a price target of $12, which implies an upside of 21% from current levels. Similiary, on the same day, Chardan’s James McIlree reiterated a Buy rating on the stock and has a price target of $10.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Christian Schwab and James McIlree have a yearly average return of 24.9% and a loss of 1.5% respectively. Schwab has a success rate of 68% and is ranked #297 out of 4758 analysts, while McIlree has a success rate of 47% and is ranked #3870.
Vuzix engages in the design, manufacture, marketing, sale, and supply of wearable display devices. Its products include smart glasses, augmented reality glasses, and virtual reality glasses.