Secondary Offering
A new share issuance by an already-public company, or a large block sale by existing shareholders. Dilutive if the company issues new shares.
A secondary offering occurs after the IPO and takes two forms. In a primary secondary offering, the company itself issues and sells new shares, raising fresh capital — this dilutes existing shareholders by increasing the share count. In a secondary-only offering, existing shareholders (insiders, private equity) sell their holdings; the company receives no proceeds.
Secondary offerings are announced via an S-3 or S-1 filing and usually price at a discount of 3–8% to the current market price to attract buyers quickly. The announcement almost always causes an immediate price drop.
A secondary offering done from a position of strength (to fund acquisitions or expansion) reads differently than one done under financial pressure.
Related Terms
Float
The number of shares freely available for public trading, excluding insider-held and restricted shares.
IntermediateIPO
The first time a private company sells shares to the public on a stock exchange, raising capital and creating a tradable market for the stock.
IntermediateShare Buyback
When a company uses its cash to purchase its own shares on the open market, reducing shares outstanding and boosting EPS.
IntermediateShares Outstanding
The total number of a company's shares currently held by all shareholders, including insiders and institutions.
Beginner