Before Monday's open, Intel (NASDAQ: INTC) announced a $15 billion sale of new common stock -- an underwritten offering, with an option for the banks running it to buy up to $2.25 billion more. Shares fell almost 5% in premarket trading on the news, and they were still lower, at around $98 as of this writing.
The reaction is understandable. A stock sale means more shares outstanding, and more shares mean each existing one owns a smaller slice of the company.
But the size of the drop is worth setting against the size of the sale. Intel's market value is about $500 billion, so $15 billion of new stock hands away about 3% of the company.
At the stock's current price, $15 billion works out to about 150 million new shares on top of the 5.04 billion Intel already has outstanding. If the underwriters take their full option, the total could reach $17.25 billion, or about 3.5% of the company.
And Intel is selling at a price few could have imagined a year ago, when shares traded near $20. They cost about five times that today, even after Monday's decline.
