Caveat emptor in lithium

Hmmm…..a company that was recently trading at $1.50 per share thus giving it a market cap of $3 billion (incidentally with zero revenues) just announced a “successful” placement of $100 million of shares at a price of 40 cents.

“Successful” for whom?

The stock fell 25% today because it offered the new tranche of shares at a 26.6% discount to the previous day’s closing price.

Why did it need to sell shares at such a discount?

Moreover, the company chose to raise capital at a similar stock price that was last seen 2 years ago and 76% below it’s peak seen 9 months ago……..

But hey, at least the stock has reverted to a significant mean and technically, the stock is oversold again.

• not personal advice.