Is there a rough way of estimating how much a stock will drop due to dillution after a stock offering? Say for instance a company is offering 25% of it's outstanding shares on primary market. Let's say this stock is trading at $100---- is there anyway to estimate rough where the price should be after dillution? Thanks!
Furthermore, When they give the offering price--- how does that affect the current stock price? Does the stock price trade down to the offering price? Just not quite sure about the dynamics of a stock offering... Thanks guys, any feedback or help to where I can find this information would be helpful.
Abstract: This paper examines the influence of secondary offerings (SOs) on the liquidity and trading activity of stocks outstanding. The results reveal that liquidity and trading activity increase after the execution of SOs. We observe that the offering discount is explained by the size of the offering and its retail composition. We have also shown that changes in liquidity and trading activity are explained by the retail composition of the offering, such that the choice of ownership structure is decisive in the level of liquidity afforded by SOs. The offering discount is one of the chosen methods of attracting small-scale investors and promoting share liquidity following these operations. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1132406