At-the-Market Offering (ATM)

How an ATM works

A company typically enters a sales agreement with one or more agents.

The issuer can then decide:

• whether to sell shares
• when to sell
• how much to sell
• within the program’s registered limit

The agent executes sales under the agreed terms.

Real 2026 example

Astrotech disclosed an ATM arrangement under which common stock could be sold from time to time through a sales agent in transactions defined as at-the-market offerings under Rule 415.^[1]

Alto Ingredients disclosed a 2026 ATM program for up to $50 million of common stock.^[2]

The final share count depended on actual sale prices and the amount the company chose to sell.

ATM vs. traditional follow-on

Traditional follow-on:

• usually priced at one time
• often sells a defined share block
• can create a visible discount to market

ATM:

• can be spread over days or months
• sale price changes with the market
• may be paused or unused

Both can dilute shareholders when new shares are issued.

Dilution depends on price

Suppose a company wants to raise:

$20 million

At $10 per share:

2 million shares

At $5 per share:

4 million shares

The same cash need produces twice as much dilution at half the stock price.

That is why ATM financing can become expensive for companies whose shares fall sharply.

Flexibility is the main advantage

An ATM can let management:

• raise small amounts
• sell into strong trading days
• avoid issuing the entire authorization at once
• match financing with cash needs

Flexibility does not guarantee good timing.

ATM capacity is not actual issuance

A company can announce:

up to $100 million

of ATM capacity and sell nothing.

The registration amount is financing capacity.

Actual dilution only occurs when shares are sold.

Agent commission

Sales agents receive compensation, often expressed as a percentage of gross proceeds.

That reduces net cash retained by the issuer.

Program economics should therefore be evaluated using:

net proceeds

rather than headline gross capacity.

ATM programs and cash runway

Early-stage companies frequently use ATMs to extend runway.

That can be rational when:

• capital needs are continuous
• trading liquidity is adequate

It can also create persistent dilution if operating cash burn remains high.

Common mistakes

"An ATM means the company already issued the full amount."

No.

"ATM shares are sold at one fixed price."

Usually not.

"ATM financing is non-dilutive."

New common shares dilute existing ownership.

"A large ATM authorization guarantees sufficient cash."

Only completed sales raise cash.

Track cumulative gross sales, net proceeds, average sale price and shares issued—not merely the authorized program size. For cash-burning companies, compare ATM proceeds with quarterly cash burn to estimate how much dilution may still be required.