Cheniere Energy Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of liquefied natural gas company Cheniere Energy (ASE: LNG) sank 11% on Wednesday after the company announced the details of its secondary stock offering.

So what: The previously announced offering of 36.3 million shares was priced at $8.35 per share, which is nearly 11% below yesterday's close of $9.34. Given that big discount, as well as the sheer size of the offering, investors are obviously concerned about the sale's dilutive potential.

Now what: Wall Street expects Cheniere to raise about $300 million from the offering, most of which will be used to pay off its term loan due early next year. But while some of the short-term financing risk has been lifted, the below-market sale serves as another reminder of the company's still-precarious financial position. With billions of debt still on the balance sheet, the stock is probably best left to more speculative types to play with.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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