Sareum Holdings Plc (LON: SAR) share price fell 3.72% today despite the pharmaceutical company not making any announcements.
However, investors will note that today’s decline could have been driven by the admission of over 5 million Sareum ordinary shares for trading on the London Stock Exchange.
Sareum shares have been falling since earlier this month after its CEO, Dr Tim Mitchell, and its Chief Scientific Officer Dr John Reader exercised options over 2,566,666 ordinary shares at an exercise price of 1.2p each for a total sum of £61,600.
The two executives decided to sell all of their new shares at 6.0p each. The new shares were expected to be admitted to trading on the LSE at 8.00 am on 10 November 2021, which is today.
Sareum shares have been falling since 3rd November when the two executives announced their decisions as investors reacted negatively to the planned share, which could signal that they do not have much confidence in the company’s future.
However, I believe that Sareum’s CEO and CSO decided to sell their shares to pocket the difference between their current share price and the low price at which they exercise their share options.
Investors should also bear in mind that the share options were part of a long term plan agreed upon on 13 March 2012, and the options were about to expire in March 2022.
Another reason behind Sareum’s share price decline could be the higher annual losses reported by the biotech company on 25 October 2021. Its losses rose to £1.5 million compared to last year’s £0.99 million loss.
All the above factors have pushed Sareum’s share price below the crucial 5.74p support level, which could lead to further declines in the future. Furthermore, given that the next support level is below the 3p level, we could see a significant drop in the future.
However, most investors hope that the company’s shares can rise above the 5.74p support now turned resistance, indicating that the bullish trend is likely to continue. Therefore, I wouldn’t buy the shares at current prices.
*This is not investment advice. Always do your due diligence before making investment decisions.
Sareum share price.
Sareum shares plunged 3.72% to trade at 5.44p, falling from Tuesday’s closing price of 5.65p.
Should you invest in Sareum shares?
Sareum shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Sareum shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies.