The secondary was approximately 2% dilutive in number of shares. But the market has assessed a 12.5% share price reduction, and appears to still be searching for a new level, perhaps lower.
Cautiously optimistic that most of the selling related to this equity offering will abate by Friday this week. But not sure we aren't experiencing broader selling in anticipation of a pending change in Fed monetary policy.
Worse outcome next few weeks would be for MELI to announce an acquisition.
Best outcome is they use the proceeds to finance the Mercado Pago side of the business and the credit card receivables.
I'm long MELI. Have added shares this week and rolled options to lower strike prices and longer dates. Starting to have concerns about the broader market valuation.
Comment
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Anchored VWAP post secondary offering is $1515 (or $1524 if you include Nov 15th).
Those who shorted on the news or immediately prior to the secondary, will need to start covering soon.
Volume is tapering off over 11/16 through today, and the secondary dilution shouldn't cause new selling pressure next week.
There doesn't appear to be any buying demand ... but we'll probably see additional selling pressure if the NDX weakens. Of course this could change at any minute, but so far this week has been a disappointment (in terms of price action). MELI better as investment that short-term trade.
Aditus_Somnus
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Hey man, thanks for sharing. Let see how it goes, I think it may hit 1400 and if it still has momentum I think it may hit $1300 as well, however the growth on long term seems promissing.
goledger
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@Aditus_Somnus, Agreed ... I also see $1399 and then $1320 as potential near-term support. But I'm thinking this secondary announcement is almost played out.