Why Comstock Resources Plummeted 36% at the Open on Thursday

Shares of exploration and production company Comstock Resources (NYSE: CRK) lost more than a third of their value in the first half hour of trading on May 14. Although it bounced back a little bit from the worst of the decline by 10 a.m. EDT, the stock was still down by just about 30%.

The big news here was the sale of 40 million shares of Comstock Resources stock at $5 a piece. The underwriters have the option of buying an additional 6 million shares. The proceeds from the sale, projected to be around $190 million (not including the underwriters' option), are expected to be used to redeem the company's Series A convertible preferred stock.

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