Knew this was coming
As we anticipated now that the Tandem (NASDAQ: TNDM) has completed the reverse stock split they are headed back to the capital markets – again – asking for money – again – and in the process diluting the stock – again – so they can waste more investor money – again. Per a company press release;
“Tandem Diabetes Care®, Inc. (NASDAQ: TNDM), a medical device company and manufacturer of the only touchscreen insulin pumps available in the United States, today announced that it is proposing to offer and sell shares of its common stock, Series A warrants and Series B warrants to purchase shares of its common stock in an underwritten public offering. All of the shares of common stock and warrants to be sold in the offering are being offered by Tandem. The offering is subject to market conditions and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering. The Company intends to use the net proceeds from the proposed offering for working capital and other general corporate purposes.”
Before we got on with some thoughts a few quick but necessary facts;
Today the stock closed at $4.68 down almost 18% – in early after-hours trading shares continued to fall
On a year to date basis the stock is down over 80%
Ok now that we have those two quick facts out of the way – oh and we almost forgot the company is carrying some $80 million in debt – let’s speculate a little. As we cannot find a reason anyone with a working mind that is not impaired by drugs or alcohol would throw good money into a bad investment. Therefore, there must a reason people will invest as crazy as it seems and yes, there will be people who do.
Now the first thought that comes to mind is these investors believe that someone dumber than they are will come along and buy the company. Yes, the greater fool theory and guess what? They just might be right as according to the rumor mill the greatest fool of all wants to get into the insulin pump business. Yep, we knew that our chardonnay guzzling friends would come through in the clutch. As Momma Kliff says; “Sanofi (NYSE: SNY) the gift that keeps on giving.”
But let’s say our wine drinking friends have rare moment of lucidity is there anyone else who might buy Tandem. Sure, but the question is why, why not let nature take its course. All additional capital will do is delay the inevitable so why rush.
Listen we don’t think it’s necessary to repeat the many issues Tandem has and the current dynamics in the insulin pump market.
Hey, we would repeat it but tonight is Game 5 of the Cubs Nationals series and we don’t want to be late getting a good seat at our favorite sports bar. The future for Tandem, it’s basically over, won’t change – the results of tonight’s game are in doubt.
One last thing if anyone really is insistent on throwing money away why not put it where it can do some good. Donate it to the hurricane victims or a relief fund for the people in Napa Valley. At least that way the money will be put to good use all investing in Tandem will do is create a future tax loss.