Deepmatter Shares Rallied 34.8% on the Proposed AIM Delisting

The Deepmatter Group PLC (LON: DMTR) share price rallied 34.8% after unveiling plans to cancel the listing of its shares on the London Stock Exchange’s AIM market and the re-registration of the company as a private entity.

Investors reacted positively to the announcement, which would see the company’s shares delisted from the AIM if shareholders approve the move at a general meeting scheduled for 19 December 2022.

However, the initial enthusiasm had waned at writing since Deepmatter shares had erased most of their gains at the time of writing. The main reasons for the proposed delisting include the company's current valuation of £1.57 million, which does not reflect its actual value. 

Deepmatter shares have fallen over 90% this year as investor sentiment towards early-stage small public companies soured. The firm also highlighted the rising costs associated with being a public company as another reason for the proposed cancellation of its shares. 

However, the proposal must garner the support of 75% of the votes cast at the general meeting for it to pass. The same rule applies to the proposal to re-register the company as a private entity. Today’s announcement is a bold move by Deepmatter to take back control of its future. 

The public markets have been brutal for many early-stage companies that are unprofitable as funding dried up due to the high-interest-rate environment and the record-high inflation combined with the bear market. 

Deepmatter plans to raise about £1.0 million by issuing 2.5 billion shares prices at 0.04p each. The company is raising the above monies to fund its future growth initiatives, but it anticipates that it will need more funds. Hence, the need to become a private company. 

The valuation of private companies is based on their fundamentals, including the revenues generated, with Deepmatter saying that it expects to generate £1.5 million this year. The company also had £0.7 million in cash today. 

However, investor optimism about the proposed changes has waned with time. 

*This is not investment advice. 

Deepmatter share price.

The Deepmatter share price rallied 34.85% to trade at 0.0472p, rising from Wednesday’s closing price of 0.035p.