Establishment Labs Holdings Inc. (ESTA) faced a significant pre-market plunge of 10.62% on November 8, 2024, as investors reacted negatively to the company's $50 million registered direct offering and its mixed third-quarter results.
The company announced a $50 million registered direct offering, which raised concerns among investors about potential dilution of their existing holdings. Direct offerings typically involve the sale of new shares at a discounted price, diluting the ownership stakes of current shareholders.
Additionally, ESTA reported its third-quarter earnings, with results that failed to meet market expectations fully. While the company beat analysts' earnings estimates by reporting a loss of $0.59 per share compared to the expected loss of $0.61, it missed revenue expectations. ESTA's revenue came in at $40.23 million, slightly below the consensus estimate of $40.45 million.
Moreover, the company's revenue growth of 4.5% year-over-year was relatively modest, potentially disappointing investors who had anticipated stronger growth prospects. The medical services industry, in which ESTA operates, is currently underperforming, ranking in the bottom 45% of Zacks Industries, which could further contribute to investor concerns about the company's future performance.
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