ShiftPixy (NASDAQ:PIXY) stock is experiencing a significant decline today following the company’s announcement of the pricing for a best efforts offering of its shares.

The offering consists of 1,176,470 units priced at $4.25 each. These units include a share of PIXY stock and a warrant to acquire an additional share. Remarkably, the exercise price of the warrants corresponds to the purchase price of the unit.

Moreover, investors have the option to obtain pre-funded warrants rather than shares, which do not have an expiration date unlike the standard warrants that expire five years after issuance. Both types of warrants are immediately actionable.

ShiftPixy anticipates raking in $5 million from this stock issuance, targeting general corporate uses such as bolstering working capital.

The Impact on PIXY Stock

The offering price of PIXY shares is below its previous closing price of $6.80 per share, inevitably exerting downward pressure on the stock value. The discounted rate logically influences the depreciation of existing shares in the market.

In addition, this offering inflates the overall number of PIXY shares in circulation, leading to dilution of current shareholders’ interests. This factor contributes significantly to today’s stock plunge.

PIXY stock recorded a 22.1% decline as of Tuesday morning, in stark contrast to the 24.8% surge observed when the markets closed on Monday.

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Additional Stock Market Insights for Tuesday

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On the article date, William White had no direct or indirect holdings in the securities mentioned in this piece. The viewpoints presented herein are those of the author, guided by InvestorPlace.com’s Publishing Guidelines.