Dilution Outlook
Horizon Bancorp’s decision to price a public offering at $14.50 per share will increase the total share count outstanding, which inevitably dilutes the ownership percentage of existing shareholders. The magnitude of the dilution hinges on the size of the issue relative to the current float. If the company is issuing, for example, 5 million shares—a typical size for a regional‑bank capital raise—this would represent roughly a 5‑6 % increase in shares outstanding (given the roughly 90‑100 million shares currently listed for Horizon). Consequently, each existing share will represent a slightly smaller slice of the equity base, and the earnings per share (EPS) will be compressed proportionally in the near term.
EPS Impact & Trading Implications
Because EPS is calculated as net income divided by the total shares outstanding, the added shares will lower the headline EPS unless the capital raised translates into proportionally higher earnings (e.g., through loan growth, fee expansion, or cost‑efficiency initiatives). In the short run, the market will likely price‑adjust for the dilution, capping upside on the stock until the company can demonstrate that the proceeds are being deployed to generate incremental profit. Traders should therefore expect modest downward pressure on the price around the pricing date, with the potential for a rebound if Horizon can credibly outline a near‑term earnings‑growth plan. A prudent approach is to hold or add on dips if the offering size is modest and the use‑of‑proceeds narrative is strong; otherwise, a short‑term short position may capture the immediate dilution‑related sell‑off.