The share price of quality assurance software developer Sigma Labs has recovered after an initial 11% fall caused by the pricing of its $4.5 million stock offering.
Sigma made nearly 1.5 million shares available for purchase at a price of $3.00 each on Thursday, but this was much less than the $3.54 they had been trading at on Wednesday. The firm’s low valuation triggered a flurry of investor activity, and its shares dropped by 11% premarket before recovering by mid-Friday to $3.68.
The $4.5 million stock offering
Sigma’s stock offering, which is now active, will be managed by the finance firm H.C. Wainwright & Co. and underwritten by an unnamed third party. As part of the deal, this underwriter has been granted a 30-day option to purchase an additional 223,276 common stock shares, potentially taking the total sold up to 1.7 million.
Such public offerings are fairly common within the industry, and many companies use them to raise additional funding for financing their running costs or future investments. Electronics developer Nano Dimension for instance, regularly makes stock offerings, and raised $100 million on the NASDAQ in November last year.
In this case, Sigma intends to use the proceeds of its offering (minus underwriting discounts and expenses), as working capital to fund its corporate functions. Subject to closing conditions, the company expects to conclude its offering on January 12th 2021, giving prospective buyers four days to make their purchase.
Sigma’s future growth prospects
Although Sigma hasn’t published its FY 2020 financial results, it managed to record annual growth in Q1 and Q3 last year, appearing to buck the downward trend seen elsewhere in the industry. The company’s flagship product, PrintRite3D, proved to be one of its key growth-drivers, attracting new clientele from a range of industries.
After the release of the firm’s Q3 2020 results, its CEO Mark K. Ruport described these new markets as “significant opportunities for revenue growth and extending its IPQA technology.” At the time, Ruport added that the company had made cost reductions in anticipation of any “macro-economic storms” that arise during 2021.
The PrintRite service itself consists of hardware and software modules that provide users with quality assurance and in-process monitoring capabilities. Having launched the updated Printrite3D Production Series in April 2020, the company has gone on to establish several partnerships that effectively reinforced its client base.
Sigma agreed to support IN4.OS’ ‘Smart Factories of the Future’ initiative in October last year, after extending its partnership with Northwestern University to cover more DED processes. Longstanding partner DMG MORI also chose the firm’s PrintRite software for its LASERTEC machines, solidifying this revenue stream well into 2021.
Share price rises ahead in 2021?
When investors consider the value of a company’s offering to be too low, it’s not unusual for its shares to temporarily fall. However, given Sigma’s rapid recovery, and the performance of many 3D printing firms so far this year, early indicators suggest that a return to the share price boom seen in the early-2010s could be on the cards.
For instance, following the release of its provisional financial results on January 7th 2020, 3D Systems saw its share price jumped by over 90%. Similarly, shares in Desktop Metal, which went public via a merger last year increased by 15%, while its metal 3D printing competitors ExOne and voxeljet benefited from similar rises.
Stratasys, meanwhile, struggled last year and underwent a ‘strategic resizing,’ but its shares increased by 30% yesterday, their largest rise since July 2015. Having had just one week’s trading so far it’s too early to identify long-term trends, but right now at least, 3D printing appears to have captured investors’ imaginations again.
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Featured image shows the Sigma Labs Inc logo. Image via SigmaLabsInc.com.
