Definition of ATM Offering

What does the term "ATM offering" mean in the world of finance? What is meant by an ATM offering?

An "ATM offering" refers to an "at-the-market offering".

Think of an ATM offering as a continuous offering, where a designated agent for a company continuously sells shares into the market until the maximum amount of the offering has been hit.

In a traditional offering, a consortium of underwriters will find buyers for an offering, usually at a decent discount to where the stock is currently trading.

For instance - a company might want to sell 1 million shares of their stock. The stock is trading at $100, and a bunch of underwriters will find willing buyers, perhaps at a price of $95/share (this will depend on the demand for the offering). The 1 million shares will be placed in one shot, and the offering will be completed.

With the ATM offering, a company might sell into the market for months on end. This will result in a somewhat constant selling pressure for perhaps months on end, as the agent for the company sells and sells and sells.

The ATM offering is typically used by companies that have a frequent need for fresh capital. A company like AMC, for instance, frequently uses ATM offerings, as then they can constantly raise capital by selling shares into the open market.

Bigger companies tend to do traditional secondary offerings. ATM offerings, on the other hand, are less expensive, which is why they are usually utilized by smaller companies.

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