A, allegedly large, subset of mainstream pundits muse that Joe Sixpack hasn't been active in the stock market since The Great Recession. Among the reasons given is that Joe figures the game is rigged against him, so why bother? To some extent Joe's right. One of the ways that rigging happens (mostly in small cap companies, to be fair to Big Capital) is how secondary offerings are structured. Among other things, they typically price from a bit to a lot below the current share price, and there's always the suspicion that the buyers knew enough ahead of time to short the stock and use the secondary shares to cover. Pure profit for a couple of days holding. Tough to prove, of course, but if it looks like a flock of ducks, it likely is a flock of ducks.
Another way is through attaching warrants to the secondary. Warrants, for those not in the know, are options to buy shares at a specified price for some term in the future. Often, but not always, the warrants are immediately effective. The trick to warrants: the specified price isn't carved in stone. The company can amend the deal any time it sees fit.
Here's an excellent example.
Original price: $2.25 to $6.00 per share
Today's price: $.35 and replacements at $.41
Such a deal. Of course, the share price of the company has been down below $.50 for some time.
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