BlackSky's "bad" news is actually good news. Timing, they say, is everything. Ten days ago, spy satellite company BlackSky nology (BKSY -16. 31%) rocketed higher on some kind words from H.
Nevertheless, Wainwright analyst Scott Buck, who predicted the stock -- worth less than $22 at the time -- would hit $28 within a year.
Furthermore, The prediction became self-fulfilling as investors glommed onto BlackSky and bid its s up to (and as of yesterday, past) $28, given the current landscape. In contrast, Then today happened.
Image source: Getty Images. What happened to BlackSky today. Additionally, Today, BlackSky stock is crashing, down 20% through 12:40 p.
ET, and for one reason: Hoping to cash in on its good fortune, BlackSky announced yesterday it would issue $125 million worth of convertible debt, and potentially as much as $143.
8 million if there was enough demand. BlackSky will use $113.
3 million of the cash raised to roll over old debt, and use the rest for "general corporate purposes (noteworthy indeed), in today's financial world.
Additionally, " Demand for the debt offering was strong, and today BlackSky upped the offering size to $160 million, and potentially $185 million. Is BlackSky a sell.
Investors aren't thrilled with the news, maybe because BlackSky will be paying 8.
25% interest on the new debt, maybe because they fear dilution when the debt converts into stock, in today's market environment. But I think they may be missing something here.
First, by my calculations, BlackSky was paying close to 11. 5% on its old debt, so the new interest rate is actually better than the old.
However, Second, BlackSky's new debt won't convert to equity until the price rises to nearly $37 a.
On the other hand, The stock would need to climb another 60% for that to happen, and I imagine most investors would be happy if that happened (something worth watching).
All things considered, today's sell-off looks an overreaction (which is quite significant). And BlackSky's news sounds pretty good to me.
Rich Smith has no position in any of the stocks mentioned (something worth watching). The data indicates that Motley Fool has no position in any of the stocks mentioned.
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