Coda Octopus Group Inc (CODA)

[gilead23]

No that logic makes no sense

The problem is the size of the offering. They are not looking at billion dollar revenue run rates. Even if they expected revenue to quintuple they wouldn't need anything in the universe of 100 million dollars for manufacturing facilities plus working capital.

The problem here is the size of the shelf makes 0 sense based on any information that is currently public. Had they done a shelf for 10 million dollars and issued a PR saying "Due to extremely strong growth and the need to ramp up for our HUD-DAVD contract we are doing a shelf filing to maintain financial flexibility" I don't think anyone would have complained and the stock would probably be up.

The problem is it wasn't a 10 million dollar offering. It was an order of magnitude greater, with no plausible reason why they would ever need to raise that kind of money or explanation for why they would be doing it.

Basically shareholders are looking at the prospect of well over 100% dilution given offerings are almost always done under the trading price. At best that dilution is going to be for a massive acquisition relative to the size of the company. Those almost never work out well. The only one I can think of that I was involved in was AIRM about 20 years ago but that was a better management team buying something in the exact same industry. That isn't possible really here.

I don't think I can emphasize how stupid and insulting to shareholders this was. It calls management's competence into question. The reaction was as obvious as the fact that water is wet.

I'll change my tune if they announce a 500 million dollar navy contract tomorrow. It just seems exceedingly unlikely.