CareDx: Strange Timing For A Share Offering

CareDx Inc CDNA shares are trading lower by $0.45 (11.5 percent) at $3.85 in Wednesday's session. The catalyst for the decline in the molecular diagnostics company is the announcement of 2.25 million share offering at $4.

The timing of the offering should be noted. On many occasions, a company will do a stock offering after a huge run in its share price; Either for current (large) shareholders to exit part of their positions or for the company to generate some working capital for the company to expand its business operations.

This is the opposite case for CareDX. The issue debuted in August 2014 and made its all-time high the following month at $10.89. Since reaching that level, its has been on a steady decline. At this time, it's approaching its all-time low from September 2015 at $3.70.

With the issue trading at this depressed level, the stock offering can mean one of two things: Either current shareholders are trying to salvage something out of their investment or the company is it a critical juncture and the new infusion of cash can help turnaround the company around.

Investors should keep a close eye on the $4 level to determine whether or not Wall Street believes the company has only long-term potential.