At-the-Market Program

When a company needs fresh capital, it can issue and sell new shares. The classic method is a capital increase, in which a fixed price and a fixed date are set. An at-the-market program works differently: the company sells new shares piece by piece directly through the stock exchange, at the current market price at the time. There is no single large sale date. Instead, the program runs over weeks or months. The company itself controls when and how many shares it sells.

Flexibility as a decisive advantage

In a classic capital increase, the company must set a price before knowing how the market will react. If the price is too high, nobody buys. If it is too low, the company gives away value. An ATM program avoids this problem entirely because the price is not fixed in advance but results from ongoing stock exchange trading.

In addition, the company can specifically take advantage of favorable moments. If the share price rises to a high level, many shares can be sold quickly on good terms. If the price falls, the program simply pauses. This kind of control is not possible with classic large placements. For investors, however, this has a downside: they never know exactly how many new shares are currently flowing into the market and diluting their own holdings.

How an ATM program works

First, the company enters into an agreement with a bank or securities dealer, known as the agent. This agent handles the actual sale of the shares on the stock exchange. The company gives the agent daily or weekly instructions: the maximum number of shares that may be sold and at what minimum price. The agent then executes the orders in normal exchange trading, so that the new shares are indistinguishable to outside buyers from regular sales by other investors.

Legally, the program must be registered with and approved by the relevant regulatory authority in advance. In the United States, where ATM programs are particularly widespread, this is done through the securities regulator, the SEC. The overall framework — that is, the maximum number of shares that may be sold through the program — is set in advance and publicly disclosed. Within this framework, the company then has free rein.

The proceeds from the sale, minus a commission for the agent, flow directly into the company’s coffers. Typical commissions are between two and three percent of the sale proceeds — significantly less than the cost of an elaborately organized large placement involving a roadshow and investor conferences.

ATM programs in practice and in the news

Technology and biotechnology companies in particular frequently rely on this instrument. Many of these firms do not yet have stable profits and must regularly raise capital to finance research or growth. An ATM program allows them to do this gradually, without having to organize an elaborate capital increase every time.

In financial news, the term often comes up when a company reports that it raised a certain amount through an ATM program during the past quarter. This is a signal that the company is actively raising money — which investors can interpret both as a sign of growth intentions and as a warning of dilution of their shares. Anyone holding a stock and reading that an ATM program is underway should check how large the approved framework is and how much of it has already been used.

The term is also increasingly coming up in connection with AI companies. Several US firms investing in AI infrastructure, which continuously need capital for this purpose, have in recent years launched ATM programs worth several billion US dollars. This shows that the instrument is relevant not only for small companies but also for large, capital-intensive growth projects.