What Happened:
Shares of cross border payment processor Flywire (NASDAQ: FLYW) fell 5.51% in the morning session after the company announced the pricing of its underwritten public offering of 8,000,000 shares of its voting common stock to the public at $32.00 per share. The offering is expected to be completed on August 14, 2023, subject to customary closing conditions.
The announcement implies that the company is issuing more shares to the public, which can affect existing shareholders, as their share of the company will be smaller due to the new shares. Also, if the price of the new shares is less than the current price of the stock, it could mean that the company thinks its stock is too expensive.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Flywire? Access our full analysis report here, it's free.
What is the market telling us:
Flywire's shares are very volatile and over the last year have had 29 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move was three months ago, when the stock gained 9.5% on the news that the company reported a "beat and raise" quarter. First quarter results exceeded analysts' revenue, gross margin and earnings per share (EPS) estimates. Revenue guidance for the next quarter was above Consensus, and the full-year revenue guidance was lifted. However, cash burn increased, and adjusted EBITDA guidance was roughly inline. Regardless, it was a strong quarter, with management noting that "it achieved the largest sales quarter in company history, with a record number of clients signed."
Flywire is up 32.5% since the beginning of the year, but at $31.71 per share it is still trading 9.52% below its 52-week high of $35.05 from July 2023. Investors who bought $1,000 worth of Flywire's shares at the IPO in May 2021 would now be looking at an investment worth $903.13.
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