Bad vibes among shareholders of Hortonworks Inc. resulted in the company’s share price collapsing 22 percent yesterday. The stock fell following an announcement that that company is looking to raise $100 million in a secondary share offering, often referred to as a “secondary IPO”.

Hortonworks is one of the three major Hadoop vendors, alongside Cloudera Inc. and MapR Technologies Inc. Its business model is based on a free, open-source, enterprise-grade Hadoop offering, with revenue coming from the sale of various services and support subscriptions on the side.

The firm became the first and so far only Hadoop vendor to go public in December 2014, and currently has a market capitalization of around $600 million.

But while analysts have generally been pleased with the company’s quarterly results, especially the consistent growth in the number of subscriptions it sells, Hortonworks continues to rack up losses.

The company’s guidance of $37 million to $38 million in fourth-quarter revenues beat analysts’ projections of $35.2 million, but Hortonworks said it’s also expecting an EBIDTA loss of between $16.8 million and $17.5 million.

A secondary offering is typically used to raise more cash. But it comes at the expense of existing shareholders, whose ownership is diluted, so the news is usually received negatively by investors.

So far, analysts’ reactions to Hortonworks’ nose-diving share price have been mixed. Needham & Co.’s Richard Kugele, told Barron’s Blog that the new share offering was not unexpected, but said the firm will need to justify why it’s doing so.

“We believe it will be incumbent on HDP during its roadshow to show why this offering, announced in this way, at this time should not be interpreted as evidence of serious difficulty,” Kugele said. “Given our overarching positive stance on the space and the company’s relative position within it, we maintain our Buy rating.”

Wunderlich Securities’s Rob Breza was more optimistic, saying that shrewd investors would see the secondary IPO as a positive move.

“HDP continues to demonstrate strong revenue growth while overall gross billings were slightly below consensus,” Breza said. “Investors are likely to view the capital raise as a positive, which should allow the company to continue its strong/aggressive industry progression as customers migrate to the Apache/Hadoop standards/architecture.”

We should note that although Hortonwork’s stock has suffered a sharp decline, it could quickly rebound when it provides more details of its new share offering and explains how it intends to use the cash it generates.

Hortonworks is set to announce its fourth quarter earnings on February 10.

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