OSCR: Why I am Still Confident about the Stock?
$Oscar Health, Inc.(OSCR)$ is down another 5% today and now trading at just 0.4 times sales..
Why? Because investors are afraid of dilution due to the $350 million convertible bond offering.
It's ridiculous. Here is why:
The company already has a revolving credit line that it would use to fund its investments anyway.
They aim to terminate that credit line following the convertible offering. They are basically turning an expensive debt into one that could be way cheaper.
No conversion happens if the stock doesn't hit $23; it pays back the principal+interest, just like regular debt.
The management says it'll use some of the proceeds to buy call options on its own stock, which will reduce dilution if the conversion happens.
The management is basically dumping an expensive debt that would definitely harm the shareholders and taking up a new one that may harm the shareholders way less, but not much more.
Long OSCR.
A line chart displaying OSCR stock price over one day. The chart shows a significant drop followed by fluctuations, ending at $17.84. Red lines indicate price changes, with a -5.26% label. Text overlays include "OSCR - Stock Price," "1D Price Chart," and "Powered by biggr."
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