Renewable fuel company Gevo Inc. (GEVO) - Get Gevo Inc. Report dropped more than 20% premarket after the company announced a $350 million secondary stock offering composed of 43.75 million shares priced at a discount of $8 each.
Gevo shares were down 21.9% to $8.62 premarket at last check. The decline comes a day after the stock jumped 72% to more than $11 per share.
The offering is expected to close Jan. 22 with H.C. Wainwright acting as the exclusive placement agent for the offering. Citigroup is acting as an advisor for the sale.
The gross proceeds of the secondary offering will go towards funding capital projects, working capital and for general corporate purposes.
Last month, the volatile small-cap stock jumped after the company announced it had exercised an option to purchase 239 acres of land in South Dakota.
Gevo said that it would build a production facility near Lake Preston, S.D., that is expected to produce 45 million gallons of jet fuel and renewable gasoline products annually.
"Clean energy momentum has been building for more than a decade. Now it is set to accelerate," said TheStreet analyst Jon Markman.
President Joe Biden's ascent to the White House with Democratic majorities in both houses of Congress should be a tailwind for the renewable energy industry, according to Markman.
"Environmental, social and corporate governance investing, also known as ESG, shifts the focus from shareholders to stakeholders. The big idea is that while profits are good for shareholders, corporate policies that benefit stakeholders -- employees, customers, suppliers and the environment -- are preferable," said Markman.