Is the ATM killing every rally?
Is management itself suppressing the share price with the ATM?
I’m genuinely curious what other shareholders think about this, because the more I look at the Q2 numbers, the more uncomfortable I am with the way the ATM is being used.
The company established the new ATM in June and then, in June alone, sold 436,448 new shares for roughly $1.85M.
That is almost half a million new shares dumped into this tiny and extremely illiquid stock in a single month. It increased the share count by roughly 6% from the pre ATM level in June alone.
I have no problem with dilution itself. This is a clinical stage biotech and obviously they need capital to continue development. What I question is why they needed to do it this aggressively and this quickly.
They were not in a situation where that $1.85M was desperately needed immediately. They could have started raising in June more slowly and preserved some flexibility for later catalysts and potentially better prices.
At the beginning of June the stock was trading above $5. By June 30 it closed at $4.37.
I am not claiming the ATM caused that decline because we do not have daily ATM sales data. But when you put 436k newly issued shares into a stock with this little liquidity, it is hard not to wonder how much buying demand was simply being absorbed by the company itself.
And this is where July worries me even more.
We only know the share count through June 30. The price action in July has looked very similar. The broader market has been strong, money keeps flowing into equities, the company has announced positive developments, yet CNSY repeatedly struggles to sustain even modest upward moves.
So my real question is: how many additional shares are already out there since June 30?
If they continued selling at anything close to the June pace, the actual dilution today could already be meaningfully higher than the 6% we currently know about.
And then there is the IR side.
The company just presented new ReSPECT LM data at a scientific conference. Investors have been waiting for the poster, the company previously said the posters would be available following the presentation, and it still has not been published.
That is what I struggle to understand.
If you know you need to raise millions from shareholders, why aggressively sell equity at depressed prices while doing such a poor job of supporting investor interest?
Publishing a poster obviously does not guarantee the stock goes up. But if you are going to use the market as your primary source of capital, surely you should want as much visibility, liquidity and investor interest as possible so you can raise the same amount of money with fewer shares.
I’m not asking management to pump the stock. I’m asking whether this is actually a sensible way to manage shareholder capital.
What does everyone else think? Am I being too harsh on the ATM strategy, or are you also concerned about how many shares may already have been issued since the end of June?