The Tantech Holdings Ltd (NASDAQ: TANH) stock price plunged 69.4% after the company filed documents with the US Securities and Exchange Commission (SEC) indicating that it wants to raise capital via pre-funded warrants for the purchase of common stock.
Although the company did not divulge the size of the share issue and the capital raise, investors demonstrated their displeasure with the announcement via the massive plunge in Tantech’s share price.
Current shareholders felt cheated that the company was raising capital barely two days after regaining compliance with Nasdaq’s listing rules after its stock price crossed above the $1 level on March 14, 2022.
Details later emerged that the company had raised $20 million after selling the new shares at 50 cents each, representing a massive discount to the stock’s Tuesday closing price of $1.60.
The selloff in TANH shares reflected the significant discount given to the investors who bought the new shares.
Tantech Holdings has to contend with its share price below the $1 Nasdaq listing requirement. Luckily for the company, it has until August 29 to meet the listing requirements after being granted a 180-day extension on March 2, 2022.
However, I believe investors should start far away from this stock, given that it had announced a 10-for-1 reverse stock split that came into effect on February 28, 2022. Still, the shares went on to fall below the listing requirements later.
A cursory look at Tantech Holdings’ daily stock price chart indicates that the stock has been falling since November 2020, when it peaked. But then, the stock has fallen steadily with brief rallies, and the situation seems the same today.
I want to be proven wrong over time regarding my analysis of TANH stock since everyone benefits if the stock price rallies. However, this seems highly unlikely under current circumstances.
For those wondering what business Tantech Holdings does, it is a British Virgin Islands holding company with operations conducted by subsidiaries established in the People’s Republic of China, Hong Kong Special Administrative Region and the British Virgin Islands.
The company even warns investors that investing in its shares carries a high degree of risk, yet some investors just bought $20 million of the shares offered in the same prospectus.
*This is not investment advice. Always do your due diligence before making investment decisions.
Tantech Holdings stock price.
The Tantech Holdings stock price plunged 69.38% to trade at $0.49, falling from Tuesday’s closing price of $1.60.
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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading