Shares of Summit Wireless Technologies, Inc. (NASDAQ: WISA) pulled a serious head fake on investors.
What Happened: On Thursday morning, the company announced it launched a storefront on Amazon.com, Inc. (NASDAQ: AMZN). Investors took this to be great news and drove the stock up to $7.06.
By the close, the sellers overpowered the buyers and drove the stock lower. The closing price was $4.60.
What Happened Next: On Thursday night, the company announced it would be issuing 2.5 million new shares at $4 each.
When companies announce new share offerings, it’s usually bearish for the stock. This is because the market perceives that if the company’s management thinks it’s a good price to sell at, the shares are either fairly priced or overvalued.
WISA Price Action: Summit Wireless was trading below the important $4 level at time of writing, down 17.6% at $3.79. [Ed. note: Friday close=$3.91.]
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