Will the additional 15% over‑allotment option be exercised and how might that affect supply?

Will the 15 % over‑allotment be exercised?

In a secondary public offering the underwriters’ over‑allotment (or “greenshoe”) is only used when the offering is oversubscribed or when the underwriters need to stabilize the price. CuriosityStream’s filing gives them a 30‑day window to buy up to an additional 15 % of the shares at the same public‑offering price. Given the “high‑interest” framing of the press release and the fact that the company is a high‑growth media business, the likelihood of a strong demand pipeline is high. Historically, most greenshoe options are exercised in about 70‑80 % of cases, especially for Nasdaq‑listed, high‑visibility deals. Expect the underwriters to exercise the option if the IPO book shows solid oversubscription or if they need to support the post‑offering price.

Impact on supply and market dynamics

If the option is exercised, the total float will rise by roughly 15 % above the base offering size, increasing the number of shares available to the market. This extra supply can create short‑term downward pressure on the stock price, particularly in the first few weeks as the new shares hit the secondary market. However, the fact that the shares are sold at the public‑offering price (rather than at a discount) means the capital raised is genuine and the dilution is modest relative to the existing float. From a fundamentals perspective, the proceeds will bolster CuriosityStream’s balance sheet and fund growth initiatives, which is a net positive for the long‑run outlook.

Actionable take‑aways

1. Watch the greenshoe window (next 30 days). A filing with the SEC or a press release confirming the exercise will be the trigger point for the supply increase.
   
2. Short‑term trade: If you are short‑term focused, anticipate a modest price dip or increased volatility as the extra shares are released. A small‑scale short‑position or a tight stop‑loss on a long position can capture this move.
   
3. Long‑term view: The dilution is offset by the expected cash infusion and growth runway. If the fundamentals remain solid, the post‑exercise dip could be a buying opportunity for investors with a longer horizon.
   

In short, the over‑allotment is likely to be exercised, expanding the float by about 15 % and creating short‑term supply‑driven pressure, but the longer‑term impact should be neutral to positive as the capital raise underwrites CuriosityStream’s growth trajectory.