Vuzix sinks 22% after pricing $85 million stock offering at a steep discount to previous close

• Vuzix stock sank as much as 22% on Friday.
• The fall came after the company priced a 4.15 million share stock offering at $20.50.
• The offering price was well below Thursday's closing price of $26.32 per share.

Vuzix stock sank as much as 22% on Friday after the company priced a 4.15 million share stock offering at $20.5 per share, well below the $26.32 closing price from Thursday.

Underwriters in the deal were granted a 30-day option to purchase up to an additional 621,951 shares. Vuzix is expected to raise roughly $85 million from the offering.

Net proceeds will be used for general corporate purposes including working capital, new technology and product development, purchases of technology, expansion of the company's software offerings, and potential acquisitions.

Vuzix creates virtual and augmented reality (VR and AR) technologies for both the consumer and enterprise markets. The firm works with over 40 Fortune 100 companies offering VR and AR solutions for manufacturing, healthcare, logistics, and field service operations.

Vuzix reported strong earnings on March 15 in what Paul Travers, the President and CEO, called a "transformational year for both Vuzix and the AR smart glasses industry." The company beat both top and bottom line analyst estimates and saw revenue rise 116% year-over-year in 2020.

However, Maxim Group analyst Jack Vander Aarde downgraded Vuzix from "buy" to "hold" based on valuation concerns after the report. Still, Aarde was mostly positive on VUZI's long-term potential and said he expects "multi-year revenue growth of 100%+."

Over the past year, shares of Vuzix rose over 2,000% from $1.15 per share. During the rise, Intel, who was once a big supporter and main investor in Vuzix, sold $57.1 million worth of stock at an average of $11.51 per share.

The company had invested $25 million in Vuzix in 2015 when its main competition was Google Glass.

2020 was a year of firsts for the AR market and Vuzix. Vuzix Blade Smart Glasses were used in the first AR total knee replacement surgery conducted in the United States. Vuzix M400 and M4000 glasses are now used by Microsoft, Rio Tinto, and more.

Shares of Vuzix traded down 21.52% as of 11:20 a.m ET on Friday.