What Are Confidentially Marketed Public Offerings (CMPOs)?

You're holding a small-cap stock after hours and a press release drops: "Company X Announces Proposed Underwritten Public Offering." Within minutes, the stock is down 15%. If you've traded momentum stocks for any length of time, you've seen this play out — and more often than not, the offering behind it is a CMPO.

CMPOs are one of the most common types of stock offerings in the small- and mid-cap space. They happen fast, they're announced after hours, and they almost always send a stock lower overnight. If you trade momentum stocks or hold positions in companies that might need capital, understanding CMPOs is essential.

What Is a CMPO?

A Confidentially Marketed Public Offering (CMPO) is an underwritten public offering where an investment bank privately markets shares to select institutional investors before the deal is publicly announced. Once enough demand is confirmed behind the scenes, the company announces the offering — typically after market hours — and prices it within one to two trading days.

The key distinction is that CMPOs use an existing S-3 shelf registration statement that has already been declared effective by the SEC. This means the company doesn't need to file new paperwork or wait for SEC review to launch the deal. The shelf is already loaded — they just need a buyer.

This makes CMPOs fundamentally different from other offering types:

ATM (At-the-Market) Offerings — shares are sold gradually into the open market over time with no fixed price or announcement
Registered Direct Offerings — shares are sold directly to a small number of investors at a negotiated price, often with warrants attached
PIPEs (Private Investment in Public Equity) — shares are sold privately and are initially restricted from trading
Bought Deals — the underwriter purchases the entire block upfront and resells it, taking on the risk themselves

CMPOs sit in a unique middle ground: they're public offerings with institutional-level confidentiality and speed.

Why Do Companies Use CMPOs?

Companies choose CMPOs over other fundraising methods for several practical reasons:

Speed. A CMPO can go from first phone call to priced deal in 24 to 48 hours. Compare that to a traditional follow-on offering, which can take weeks of SEC review and public marketing.

Confidentiality. Because the deal is marketed privately before any public announcement, the stock price doesn't get hammered by rumors or leaks during the marketing phase. The company controls the timing of disclosure.

Demand validation. By quietly reaching out to institutional investors first, the underwriter can gauge real demand before the company commits to the offering. If demand is weak, they can pull the deal without the public ever knowing it was attempted.

No shareholder approval required. Since CMPOs use registered shares under an existing S-3 shelf, they typically don't require a shareholder vote — unlike certain private placements or PIPEs that may trigger exchange listing rules.

Lower execution risk. The combination of pre-confirmed demand and rapid pricing means there's less time for the market to move against the deal.

How a CMPO Works: Step by Step

Here's what a typical CMPO looks like from start to finish:

Step 1: Engagement

The company quietly engages an investment bank to act as the sole bookrunner or lead underwriter. This happens behind the scenes with no public disclosure. The company and bank agree on a rough size and structure for the deal.

Step 2: Confidential Marketing

The underwriter reaches out to a curated list of institutional investors — hedge funds, mutual funds, and other large buyers. These conversations happen under confidentiality agreements. The bank shares basic deal terms and gauges interest at various price levels.

Step 3: Public Announcement

Once sufficient demand is confirmed, the company issues a press release announcing the proposed underwritten public offering. This almost always happens after market close — typically between 4:00 PM and 8:00 PM ET. The press release usually does not include the offering price or exact size.

Step 4: Pricing

The deal is priced based on the institutional order book. Pricing typically occurs the same evening as the announcement or the following day. The offering price is almost always at a discount to the closing price, sometimes 5–15% below where the stock last traded.

Step 5: Closing

The transaction settles within two business days. New shares are delivered to institutional buyers, and the company receives the proceeds (minus underwriting fees, typically 5–7% of the gross amount raised).

The entire process — from the first confidential phone call to cash in hand — can be completed in under a week.

How CMPOs Impact Stock Price

When a CMPO is announced after hours, the stock almost always drops in extended trading. This happens for two reasons:

Supply increase. New shares are being created, which increases the total float. More shares outstanding means each existing share represents a smaller piece of the company.
Price anchoring. The offering will be priced at a discount to market. Traders immediately reprice the stock toward the expected offering price because no rational buyer would pay more on the open market than institutions are paying in the offering.

Typical Price Action

The pattern for most CMPOs follows a recognizable sequence:

After-hours announcement: Stock drops 5–20% depending on the size of the offering relative to the company's market cap
Next morning: Stock opens near or slightly below the offering price as the market digests the news
First few days: Price may continue to drift lower as institutional buyers who got shares in the offering hedge or flip their positions
Recovery phase: If the company uses the capital well and communicates a clear plan, the stock can recover over the following weeks and months

Size Matters

The impact on stock price is heavily influenced by the offering size relative to the existing float. A $10 million offering for a company with a $500 million market cap is a minor event. The same $10 million offering for a $30 million market cap company is massively dilutive and will hit the stock much harder.

CMPOs vs. Other Offering Types

Here's how CMPOs stack up against the other common offering structures:

Feature	CMPO	ATM	Registered Direct	PIPE
Speed	Fast (1–2 days)	Ongoing (weeks/months)	Moderate (days)	Moderate (days–weeks)
Confidentiality	High (pre-announcement)	Low (public filing)	Moderate	High
Dilution Visibility	Sudden (single event)	Gradual (drip over time)	Sudden	Sudden
Investor Type	Institutional	Open market buyers	Select investors	Select accredited investors
Registration	S-3 shelf required	S-3 shelf required	Varies	Not required (restricted shares)
Shareholder Vote	No	No	No	Sometimes
Warrants Included	Rarely	Never	Often	Often
Typical Discount	5–15%	At market price	10–20%+	10–25%+

How to Spot a CMPO Before It Happens

You can't predict CMPOs with certainty, but there are warning signs that experienced traders watch for:

Recent S-3 shelf registration. If a company has filed or recently had an S-3 declared effective, the shelf is loaded and ready to use. This is a prerequisite for a CMPO.

Low cash runway. Companies burning cash with only a few quarters of runway left are prime candidates. Check the most recent 10-Q quarterly filing for cash and cash equivalents, and compare it to the quarterly burn rate.

Stock price run-up. Companies often wait for their stock to rally before launching an offering — they can raise the same amount of money by issuing fewer shares at a higher price. A sudden, unexplained run-up on above-average volume can be a precursor.

Insider quiet periods. If insider selling suddenly stops or corporate insiders go quiet on social media, it may indicate the company is in a blackout period ahead of an offering.

Analyst upgrades or positive news flow. Sometimes companies coordinate positive catalysts (earnings beats, partnerships, data releases) just before launching a CMPO to maximize the offering price.

Key Takeaways

CMPOs are fast and confidential — they use an existing S-3 shelf and can be announced, priced, and closed within days
They almost always cause a short-term stock decline — the combination of new share supply and a discounted offering price pulls the stock lower
The impact depends on relative size — compare the offering amount to the company's market cap and float, not just the dollar amount
Warning signs exist — recent S-3 filings, low cash, and stock run-ups are the most reliable signals
Understanding the mechanics gives you an edge — whether you're avoiding the downside, trading the bounce, or evaluating a long-term position after the offering

DiluTracker monitors S-3 shelf filings, offering announcements, and pricing details in real time — so when a CMPO drops after hours, you'll already know which companies had the shelf loaded and were most likely to pull the trigger. Stop getting blindsided and start tracking dilution before it hits.