In finance, there are all sorts of arcane acronyms, many of which float below the radar screen of normal life until all of a sudden they’re important and interesting. Almost no one had heard of an SPE until Enron; no one had heard of a CDO or an MBS until the financial crisis. On a less pejorative note, there was a time when no one had heard of an ETF either. They can turn out to be wonderful or ugly — which might explain why acronyms I haven’t heard cause my ears to perk up.
In the past year, I started to hear people referring to various companies as “ATM issuers.” In this case, ATM means “at the market,” not the automated teller machine that we all know and love. It means that a publicly traded company is raising new money by selling shares, but instead of selling the shares in a structured sale that usually happens on a single day and is led by an investment bank, which is how publicly traded companies typically raise money, the company is selling small (or large) amounts whenever it chooses.
That explains why ATM transactions are also described, inelegantly but descriptively, as “dribbling out” stock. Both kinds of ATMs do function in sort of the same way — a company gets cash by selling its shares, just as you get cash at the automated teller machine.
“ATMs can help companies quickly, quietly and cheaply raise capital,” wrote Ben Silverman, director of research at VerityData, which provides data for investment professionals.
An immense amount of money has been raised via ATM sales — $335 billion since 2020, according to VerityData. Despite that, the ATM phenomenon is a little understood part of the market. It’s worth understanding not just because of its size, but because ATM issuance is so correlated with a surging market.
Issuance was up over 40 percent through the first half of 2025, to almost $80 billion, as compared with the first half of 2024. ATMs grew in volume sharply in the post-pandemic bull market, dipped again as the market cooled, and are on track this year for highest volume ever.
ATMs are used heavily by companies that are often labeled by analysts as “meme stocks”— whose share prices are often driven by social media attention and retail investors piling in or out — which have at times included such companies as MicroStrategy and Trump Media & Technology. Perhaps most importantly, President Donald Trump is talking about reducing regulation in the market by reducing disclosure requirements for publicly traded companies. ATMs are a reminder that in the world of finance, things may lurk in the shadows.
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Until 2007, the use of ATMs was limited to big companies, who usually didn’t take advantage of them because when they sold stock, they wanted a Wall Street firm to help them market the sale to big institutions. Amid the press for deregulation that preceded the 2008 financial crisis, the Securities and Exchange Commission decided to let small companies use them, too. The basic idea is that an ATM makes raising capital way easier and cheaper. Instead of hiring a Wall Street bank to sell its stock, which means the bank has to do its own due diligence to make sure the company is copacetic, the company can just file a plan with the SEC to sell stock on an ongoing basis.
Perhaps not surprisingly, given that the financial crisis was brewing, no one mainstream paid much attention to the rule change. But the finance industry did. The Council of Institutional Investors fought against the change, arguing in a letter to the SEC that smaller companies may be more prone to stock price manipulation and to financial reporting fraud.
The SEC “should ensure that the final rule avoids understating the significant risks that smaller public companies present to investors,” it wrote.
Pink Sheets, which represented tiny companies that don’t trade on official exchanges (the company is now called OTC Markets) argued strongly for the change, on the basis that it would reduce the cost of raising capital.
ATM sales began to surge. At the end of 2019, three academics wrote a study that they billed as the first — and is still one of the only — “comprehensive and empirical” investigations of ATMs. They found that the use “increased dramatically,” from almost nothing to $20 billion in 2016, which was the last year they analyzed.
So-called REITs, or real estate investment trusts, which are required to pay out 90 percent of their taxable income as dividends, are heavy users of ATMs. That makes sense; REITs need to raise capital on an ongoing basis to fund their growth.
The use of ATMs has also surged in non-REITs, like biotech companies. The study noted that firms using ATMs tended to be smaller and less profitable; were more likely to be owned by retail investors, rather than big institutions; and were “more opaque and of lower quality.”
The authors noted that investment analysts were more pessimistic about the stocks of companies that use ATMs — and were more likely to turn even more negative after the stock sale than analysts who follow companies after traditional offerings were.
You might think that because an ATM doesn’t require a Wall Street bank to lead the offering that Wall Street banks wouldn’t care for them. Actually, Wall Street loves ATMs. The bankers have to do less work than in a traditional stock sale, and they take less risk, both financial and legal.
In a typical stock sale, a Wall Street bank has to take ownership of the shares before selling them to other investors. And it is likely to get sued if the company turns out to be a fraud. In an ATM sale, it just gets its commissions, end of story.
“No special selling efforts by the agent are made in connection with the sales; the agent is never at risk as a principal; and the agent’s exposure to liability can be more limited,” law firm Proskauer wrote.
Even better, ATM sales can keep a struggling company in business, so Wall Street can keep collecting fees.
Because companies using ATMs can time their stock sales to when their stock is soaring, it’s probably not surprising that their usage is heavily correlated to meme stocks, which tend to have sharp peaks and valleys in their prices.
While there’s no academic study officially linking the two, when I looked at 30 companies that are often called meme stocks, such as GameStop and Virgin Galactic, I didn’t find one that didn’t have an ATM program.
If you think of a small speculative company, like all the companies promising breakthroughs in quantum computing, nuclear power and space exploration, you can check to see if it’s doing an ATM program. The answer is probably yes.
“It’s a means of getting cash quick — and selling shares without much regulatory issues,” said Doug Kass, the founder of Seabreeze Capital Management.
Needing cash isn’t necessarily a bad thing. But there is an opacity to ATM offerings that may mean buyer beware. Disclosure that a company has sold stock via an ATM is only in the financial statements after the fact. That’s why a trader at a major hedge fund who is not allowed to speak to the press on the record calls ATM sales “soft inside information.”
Management knows when the company is going to sell stock, and favored shareholders may have negotiated a discounted price at which they’ll be willing to buy. The certainty of a price at which they can buy a specific number of shares may enable them to structure other trades and profit from the difference in prices. Shortsellers who find out that a company is going to sell stock under an ATM program may short more stock because now they know the company isn’t about to be acquired. And so on.
There also can be a subtle cost to ATMs that can sneak up on you. When a company does a secondary offering, you can see how much your ownership percentage is going to be reduced by the new shares being sold. With ATMs, it’s harder to stay on top of the dilution.
Consider these three companies: Anavex, a controversial biotech company, BigBear.ai, and Oklo, a nuclear power plant developer. In each case, the number of shares outstanding has increased by 50 percent to 100 percent in the past few years. If you have stock in a company that has doubled its share count, then you own half as much of the company as you used to own. (BigBear.ai has noted the cash it has gotten from using ATM sales; Anavex and Oklo did not return requests for comment.)
Looking back, it’s easy to find ATM issuances that didn’t end well for investors— and harder (outside the real estate industry) to find success stories. But there’s no definitive research, and we’re in unprecedented times.
If you’re an investor in a company doing ATMs, make sure you understand why the company needs the money, keep track of the dilution and be aware that life isn’t fair: Others may know more than you do. If not, watch this space anyway. There may come a time when ATM is as commonplace as ETF — or CDO.
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