August 8, 2022

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Why Blink Charging Stock Short-Circuited Now

2 min read

What happened

Shares of electric powered-motor vehicle charging network operator Blink Charging (NASDAQ:BLNK) collapsed nowadays, falling 9.2% by 1:30 p.m. EST, and for motives having almost nothing to do with its business. It was the company’s CEO who looks to have shot Blink in the foot.

A short circuit in a fuse box throws sparks

Graphic resource: Getty Photos.

So what

Yesterday after near of buying and selling, CEO Michael Farkas filed a Kind SC 13D/A with the Securities and Exchange Commission in which he encouraged that on Jan. 12 — a day when Blink shares shut at extra than $52 — he marketed 540,000 shares of typical inventory at just $41 just about every.

Farkas reaped full gross proceeds of $22.1 million from his stock sale, but Blink shareholders are having a $200 million decline to current market capitalization these days as traders digest final night’s information, and question why Blink’s very own manager was keen to offer so many shares at such a low cost to Blink’s then-current price tag. ¬†

Now what

The respond to is that when you want to exit a substantial position swiftly, you normally have to settle for a massive haircut on the price tag you are going to get. (In Farkas’ situation, he also employed a broker to underwrite his gross sales). Any much more-gradual exit by the normal open sector will be immediately observed, and could start off a stress that will travel the inventory selling price down even additional.

Seen from this standpoint, Farkas’ large inventory sale could not seem quite as worrisome as 1st meets the eye. It really is also truly worth noting that even following Tuesday’s sale, Farkas proceeds to own 6.7 million shares of Blink, so he however has a massive stake in Blink’s achievement.

This could be modest convenience to shareholders who are smarting from present-day losses, but at the very least it’s some ease and comfort.