What happened
Shares of Invitae (NVTA +0.00%) were crashing 19.4% lower as of 12:13 p.m. ET on Thursday. The decline came on the heels of two developments.
Invitae revealed in a regulatory filing on Wednesday that it had negotiated an agreement with a holder of the company's outstanding 2% convertible senior notes due 2024. The holder will exchange over $17.2 million in principal value of the old notes for $100,000 worth of new 4.5% Series A convertible senior secured notes due 2028 plus more than 15.8 million new shares of Invitae stock.
Also, StockNews.com downgraded Invitae to sell from hold on Thursday. The website joins several Wall Street analysts with negative outlooks about the genetic testing stock, including Piper Sandler and Goldman Sachs.
OTC: NVTA
Key Data Points
So what
There's one main problem with Invitae's agreement to swap old notes for new notes plus new shares: It dilutes the value of the company's existing shares. However, that alone doesn't explain the magnitude of today's decline in Invitae's share price. The number of new shares that the genetic testing company is issuing represents a little under 6% of Invitae's outstanding shares.
It's hard to say how much sway StockNews.com has on the broader investor community. But the website's downgrade piled on even more negative news for Invitae when it's in desperate need of something positive to happen.
Now what
What really matters for Invitae going forward is making progress in turning its business around. The company's revenue fell nearly 12% year over year in the second quarter of 2023. However, factoring out the businesses and geographies that Invitae exited, its revenue rose 1%. The company will need to deliver much stronger growth to regain investors' confidence.
