Dragonfly shares are in decline

Dragonfly shares fell sharply after the battery company disclosed in an SEC filing that some security holders intended to sell shares.

Dragonfly released a prospectus for certain security holders to sell up to 38.6 million shares of common stock, 16.7 million warrants to purchase common stock, and 16.7 million shares issuable upon the exercise of warrants. As reported by Fool.com

Markets went out of control this week for the company’s shares. 

Its industrial shares surged earlier in the week, reaching 55.8 % at its highest point in trading. However, this did not last long, and they currently slumped to 32 % for the week as of this Friday.

But what about Dragonfly shares?

These warrants, along with the shares, were issued to investors in the company, all part of the business combination with acquisition firm Chardan NexTech Acquisition 2 Corp, which closed in October.

That exchange brought the company $250 million of capital, including a strategic private investment from Thor Industries.

This boosted Dragonfly Energy’s capital to accelerate its business and commercialize its solid-state battery technology. 

What can happen now to Dragonfly?

Chardon NexTech raised money from investors to increase its growth and take companies public.

It is usual for these venture capital-like investors to monticulate part of their investments shortly after the deal closes, as is the case with Dragonfly. 

And no doubt such sales can affect the stock, as was the case with Dragonfly, as ownership is transferred from SPAC investors to other public market investors.

And given the number of shares that Dragonfly investors expect to sell, it is likely that this stock will remain under pressure until they finish selling.

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