The placement announcement during trading hours, just after the...

The placement announcement during trading hours, just after the contract update pre-market… Burning some traders in the process… It felt as like the party finally started, and then they immediately replaced all the alcohol with soda. Why?


In it’s history EOS only placed shares once, with Northrop Grumman, back in 2005 or 2004 for a stake of 8,80% at a price of … 4,50 dollar. Otherwise, no dilution, no options exercised, nothing, even though the company at times seemed to be close to the edge. Top management are big stakeholders in the company, they also own options exercisable early 2019 at 3,00 dollar. After all those years of hardship, why would they just before the break of dawn dilute the stock, if not for a very, very good reason?


I think EOS is going through a transitioning fase. The order size from Orbital ATK is at least six times 2016 revenues. That puts a lot of strain on the company to deliver and they are in a hurry to put subcontractors to work. Also, the huge order was not an accident. Within two months, the company has promised another large contract. Unfortunately, the cash at hand was limited, and you have to spend money to make money.


Selling because of the placement, expecting “to rebuy more units at a lower price before its next move up”, seems very risky. Another large contract order, as pre-announced by the company, will probably really set the party on fire, and you don’t want to pay the new entrance-fee.