Money Matters - Simplified

Cell Therapeutics Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Cell Therapeutics (Nasdaq: CTIC) fell 10% in early trading Wednesday.

So what: After shares jumped yesterday, shares have been crushed today after Cell Therapeutics announced that it has sold $21 million of preferred stock and warrants to institutional investors. This gives the company additional cash for operations but also dilutes current shareholders.

Now what: The preferred shares are convertible to common shares at $0.37 per share, so this should give investors some idea of the value big investors see in the shares. Investors also received warrants at $0.45 per share for up to 22.7 million shares. The price of this offering was much better than yesterday’s closing price of $0.44 per share and would make me rethink a long position in this speculative stock.

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