Key Points
- GST shares barely reacted to the firm’s £1.335 million capital raise.
- The muted reaction indicates that investors have confidence in the firm’s management.
- GST shares look promising at current levels, but further declines could occur.
The GSTechnologies Ltd (LON: GST) share price edged 4.61% lower after announcing a share placement and subscription to raise £1,335,100 by selling 23.1 million shares at 2.10p per share.
Investors barely reacted to the capital raise since the new shares were priced slightly lower than their closing price on Monday, triggering the 4.6% decline.
Today’s movement also shows that investors are pretty confident in the company’s prospects and management team following recent announcements.
In my last article on GST, I said that the company’s shares were headed towards the 2p level driven by negative investor sentiment. However, I also pointed out that s short-term investors; we are always looking at price to guide our trading decisions as short-term investors.
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Well, it appears that investor sentiment towards the company may be changing to a more positive tone given today’s muted reaction to the dilution of current shareholders via a capital raise.
GST told investors that the funds raised today would be used to fast track the implementation of its overall strategy with a particular focus on funding sales and marketing activities. The money will also develop further and implement the Wise MPay technology.
Some of the funds will also be used to finalise the acquisition of Angra Limited, which is yet to receive approval from the FCA.
The company also appointed Monecor (London) Ltd as its sole broker. Monecor also trades as ETX Capital and was responsible for arranging the share placement and subscription.
Investor optimism in GST may be rewarded this year as the company implements its Wise MPay platform that supports multiple stablecoins pegged to the US dollar, the Euro, the Pound and the Chinese yuan. In addition, the system will facilitate cross-border transactions, which is a market with significant potential.
Tone Goh, GSTechnologies Chairman, commented: “I am pleased that we are able to announce this successful fundraising, again at a higher price than our previous raise, to provide further funds for our development. I look forward to providing further updates in due course, including in relation to the FCA approval of the Angra acquisition, as we seek to rapidly build a blockchain-enabled neobanking business.”
GST shares are trading above the 2p level and look pretty attractive. However, before jumping in, I was waiting for a pullback to the 1.85p support level. Nevertheless, the current prices may be attractive to long-term investors.