Shares of Red Cat Holdings Inc. (RCAT) plummeted 16.68% during intraday trading on Wednesday, following a sharp decline in pre-market activity.

The significant drop was primarily driven by the drone technology company's announcement of a $225 million public offering of its common stock. The offering of approximately 23.9 million shares was priced at $9.40 per share, a discount to the prior trading price, raising concerns about shareholder dilution. Companies often see their stock prices fall after such announcements as the increase in shares outstanding can reduce the value of existing holdings.

Compounding the negative sentiment was the company's disappointing first-quarter financial performance, which significantly missed analyst expectations. Red Cat reported a wider-than-anticipated loss per share and revenue that fell short of forecasts, signaling deteriorating profitability and adding to investor worries about the company's near-term outlook.