- [email protected] Capital shares plunged 6.59% on an open offer to raise funds.
- However, investors’ reaction was much better than expected, showing confidence.
- So, should you buy SYME shares? Read on to find out.
The [email protected] Capital PLC (LON: SYME) share price plunged 6.59% today after launching an open offer to raise £320,855 from qualifying shareholders by selling over 641.7 million shares at 0.05p each.
Despite the decline in SYME shares, investors should note that the decline did not reflect the total discount offered to shareholders during the open offer. SYME shares fell to a low of 0.077p, yet the open offer shares were priced at 0.05p.
Also read: Five Best Shares For Beginners To Watch In 2022.
The market’s subdued reaction to the open offer shows that investors have confidence in [email protected] Capital’s management team, such that they did not need to sell shares so that the market price could match the open offer share price.
I have mentioned in previous articles that the inventory monetisation company could run out of money, which is a significant risk for the business given that it is not yet profitable. However, the company could face an existential crisis if it ran out of money and could not keep operating.
Luckily for SYME, it has the backing of Venus Capital, which has committed to providing funding that will keep it afloat. In addition, SYME has chosen to issue new shares given that, unlike debt, issuing new shares allows the company to raise much-needed cash without paying it back or paying interest.
However, raising funds by issuing new shares tends to dilute existing shareholders who must subscribe to the new shares if they want to maintain their stake in a firm.
SYME shareholders can participate in the open offer, where they can buy one open offer share for every 66 shares they currently own in the company. The open offer shares also come with warrants to subscribe to one for every two open offer shares bought.
[email protected] Capital continues to progress after signing its first inventory monetisation deal in Dubai last month via the CARGOES Finance platform, which provides global inventory-based funding to SMEs.
So, should you buy SYME shares? The answer depends on your risk profile. SYME’s business is still young, making it a high-risk investment.
*This is not investment advice. Always do your due diligence before making investment decisions.
SYME share price.
The [email protected] Capital share price plunged 6.59% to trade at 0.077p, falling from Thursday’s closing price of 0.0824p.