Crypto mining and blockchain player SOS Limited (NYSE:SOS) has been having a busy couple of weeks. Press releases from the company have covered a lot of new business strategizing that has been moving the price of SOS stock.
SOS is a Chinese tech company that provides a wide range of services. Recently, SOS has been entering the growing cryptocurrency market with its own crypto mining operation and blockchain offering. SOS stock has seen a nice boost in the last week after the company announced its intent to establish a digital asset exchange.
Yesterday, the company announced its joint venture with Ronghe Finance to construct a supercomputing center in China. The announcement was great news for SOS, as it saw plans to physically supplement the company’s venture into cryptocurrency. The center will accomplish multiple goals, but most notably for SOS stockholders, it will establish support for crypto currency mining and blockchain assets.
SOS Stock Down After Most Recent Announcement
Even after all this good news, SOS stock is dipping. The losses are catalyzed by the company’s most recent press release.
The Ronghe joint venture carries with it a significant financial burden for SOS. The construction of the computing center and funding the JV will cost the company about $5 million. This bill mounds on top of the other expenses the company is undertaking through its shift to crypto. The piling expenses are driving the company to announce a new public offering on SOS stock.
The Tuesday morning press release by SOS announces the company’s intent to offer 25 million American Depositary Shares at $5 a share. The offering intends to finance the further development of the company’s crypto mining network. It also will supplement expansion of the company’s crypto insurance venture and other business dealings, on top of general expenses.
The announcement hasn’t gone over too well with SOS shareholders. Many current owners of SOS stock fear dilution resulting from the offering. As a result, many investors are selling off shares, driving the price down by 15% this morning. Fears of overvaluation are making some weary of the announcement after an otherwise solid week for SOS stock.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article.