Shares of First Solar cooled Wednesday after the solar panel maker said it planned to sell 8. First the good news.

Demand for solar panels has been growing. The company swung to a profit in the first quarter. That creates prime conditions for the company to raise capital through a secondary offering -- a healthy and prudent move.

Now the bad news.

What Happens to a Stock When It Files a Secondary Offering? | Synonym

Well, it's not really bad news per se. You'll often see a company's stock fall after a secondary offering because it increases the number of shares outstanding and cuts back, or dilutes, the ownership stakes for existing investors. Investors are a fickle bunch. While it's probably a good thing in the long run, no one likes to see their ownership watered down.

THAT'S 1 way to ensure positive coverage! They say the offering doesn't "meaningfully alter" their view of First Solar. But looking at the ebbs and flows of bets on a stock decline, we'll probably see some shorts coming out of the woods soonish.

Why do share prices fall after a company has a secondary offering?

Maxim analysts were cautious about the stock offering. They say it will be "dilutive" to earnings, so that may attract some of those downside bettors. First Solar filed for 8.

That premarket move definitely wasn't looking pretty but the stock seems to be making a comeback. Maxim thinks the company needs to be booking more business. The capital inflow will help First Solar bring some undeveloped projects to fruition but it remains to be seen whether that will be enough to offset the dilutive impact on its earnings. The Buzz All markets and investing news all the time. First Solar's stock has been on a tear this year. Markets shrug off China stimulus.

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Where's the drama on Wall Street? StupidStock Move of the Day!

Secondary market offering - Wikipedia

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Secondary Offering Definition & Example | Investing Answers

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