Discover to sell $500 million in stock
Filed under: Company News, Investing
It says something about the market's generally improving impression of financial stocks. Discover Financial Services (DFS) will sell $500 million in shares. The disclosure about what the company will do with the money is typically vague. Underwriters will get a 30-day option to sell additional shares of up to 15 percent of the original offering to cover over-allotments.
Discover has not priced the shares yet, but its stock fell almost 10 percent after hours to $9.50. Discover has a market cap of $5.1 billion, so the drop is what should have been expected.
The unfortunate thing for shareholders is that many financial companies are raising capital whether they need it or not. Share prices have risen significantly across the sector since their March lows. In exchange for a little dry powder, stockholders get a bunch of dilution.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
7-06-2009 @ 8:30PM
kevin said...
Many years ago I had a discover card, it was the worst credit card I ever had.
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7-06-2009 @ 9:04PM
tom said...
Discover is worse than usless - absolutely no backup in a payment dispute. They took a telemarketers side on a thime-share rental scam. Their customer was an elderly mid-west couple.
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7-07-2009 @ 7:52PM
Randy said...
Ditto. Wouldn't invest a dime in DFS. Bad, bad, bad business practices.
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7-07-2009 @ 8:40AM
phil said...
credit cards want to destroy our economy by increasing the rate of credit, by taking out the balance available by borrow from government, and by selling more shares
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7-07-2009 @ 7:05PM
Drew said...
There are a lot of stupid people that will buy the common stock. Then discover will buy back the preferred stock with the common stock funds.. All sounds good on the surface , except when a company goes belly up , all common stock is wiped out , has no value. Preferred stock gets monies from the liquidiation of the company,and guess what" the big wheels in discover own the preferred stock.These guys want to sale their preferred stock back to the company before it goes belly up.It has nothing to do with the gov't portion being bought back. They want face value back instead of liquidation value.Look out buyers of the common stock,discover is going under and you are being used to put money into the ceo's, etc,that are responsible for its problems
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