What Is an At-the-Market Offering (ATM)?
An at-the-market offering is an arrangement in which a public company sells newly issued shares directly into the secondary market over time, at whatever price the stock happens to trade. Instead of hiring underwriters to market a block of stock to institutions, the company appoints a sales agent, typically an investment bank, that executes small sales on the exchange whenever the company instructs it to.
ATMs sit on top of a shelf registration statement, usually a Form S-3, that the company has already filed with the SEC. Once the program is established, the issuer can raise money opportunistically: it might sell aggressively after good news pushes the stock up, then pause entirely when the price weakens. That control over timing is the defining feature of the structure.
How ATM Programs Work
The company and its agent sign an equity distribution agreement that caps the total dollar amount of the program, often anywhere from 100 million to several billion dollars. Sales are executed like ordinary trades, so buyers in the market generally cannot tell they are purchasing newly issued shares. The agent earns a commission of roughly 1 to 3% of proceeds, well below the 4 to 6% gross spread on a marketed follow-on.
Because shares trickle out at market prices, the issuer avoids the discount of 3 to 8% that a traditional overnight offering usually requires. The trade-off is speed and certainty: an ATM cannot raise a large sum instantly, and daily trading volume limits how much can be sold without pushing the price down. Companies disclose ATM activity in their quarterly filings, so investors can track the cumulative issuance.
Why ATMs Matter
ATM issuance has grown into a major share of equity capital markets activity. REITs use ATMs to fund property acquisitions in step with their deal pipeline, and clinical-stage biotechs use them to extend cash runway after positive trial data. During 2020 and 2021 several high-profile companies raised billions this way, with retail-favorite stocks selling into their own rallies to shore up their balance sheets.
For candidates targeting equity capital markets, understand the decision an issuer faces: an ATM minimizes fees and discount but drips capital in slowly, while a marketed follow-on delivers a large sum in one night at a concession. Watching which route a company chooses reveals how urgent its capital need is and how sensitive management is to dilution at the current share price.
