Why Dragonfly Energy Stock Is Cratering Today

Dragonfly Energy Holdings filed an prospectus for certain security holders in order to sell up to 38.6 millions shares of its common stock and 16.7million warrants to purchase it. 16.7 million warrants can also be used to purchase common stock. 16.7 Million shares were issued when warrants were exercised. The warrants and shares were issued to investors as part of the company's business combination with Chardan NexTech Acquisition 2 Corp (SPAC), which closed in October. The company received $250 million in capital and a strategic private investment from Thor Industries. Chardan NexTech's legacy investors would like to make a profit on their investment and sell a portion the warrants and shares they received as part of the deal. They were given a large number of shares in connection with the business combination. These shares are more than the total number of open-market shares owned by the public. Chardon NexTech and other SPACs raised capital from investors to help companies go public and increase their growth. Venture capital-like investors often monetize some of the investments within a short time after closing a deal. This is what Dragonfly was. These sales, which are ownership transfers from SPAC investors into other public market investors, can have a negative impact on the stock. Matthew DiLallo does not hold any position in any of these stocks. The Motley Fool does not hold any position in any of these stocks. The disclosure policy of the Motley Fool is available.