Red Cat Holdings Stock Is Tumbling Tuesday: Here's Why

Red Cat Holdings Inc RCAT shares are trading lower Tuesday after the company announced a registered direct offering.

What Happened: Drone technology company Red Cat entered into securities purchase agreements with institutional investors for the purchase and sale of approximately 6.45 million shares of common stock.

The company anticipates gross proceeds of approximately $46.75 million. Net proceeds will be used for general corporate purposes and working capital, including operating expenditures related to its unmanned surface vessel division.

Red Cat ended the first quarter with $9.3 million in cash and accounts receivable. The company said last month that it closed on $30 million of funding subsequent to the end of the first quarter.

How To Buy RCAT Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in Red Cat’s case, it’s in the Information Technology sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

RCAT Price Action: Red Cat shares were down 17.8% at $7.55 at the time of publication Tuesday, according to Benzinga Pro.

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Photo: MacroEcon/Shutterstock.