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TDH Holdings (PETZ) Stock Price Rallied 74.3% Despite Dilutive $9.9M Capital Raise

Simon Mugo trader
Updated 4 Nov 2021

TDH Holdings Inc (NASDAQ: PETZ) stock price rallied 74.3% during premarket trading, extending yesterday’s 32.4% rally as investors responded positively to its announcement about raising $9.9 million from investors.

The Chinese pet food company revealed that it had sold 15 million shares at $0.64 per share and warrants the purchase of an additional 30 million common shares in the future at $1.47 per share. The warrants were sold at $0.01 per share.

The company told investors that it plans to use the proceeds of the share subscription to make strategic acquisitions of companies that complement its business but clarified that it did not yet have a potential acquisition target.

Interestingly, the company’s shares have risen way above the prices quoted in the share subscriptions agreement indicating that retail investors have identified the company as a quick profit target.

Given that TDH Holdings shares were trading below $2 earlier this week, it is clear why retail investors are attracted to the stock, given that they can quickly push its prices higher and make significant percentage gains.

TDH Holdings had another capital raise in late September, where they raised $9.1 million, which saw the company’s shares drop significantly as existing shareholders were diluted.

The opposite happened this time round as retail investors pushed the pet food company’s share price higher.

Stocks that rally sharply in the space of a day or a few days are usually followed by significant pullbacks, and I believe this will be the case with PETZ stock price as investors start taking profits on their positions.

I wouldn’t buy PETZ stock at current prices if I missed the last two days’ rally.

*This is not investment advice. Always do your due diligence before making investment decisions.

TDH Holdings stock price.

Tradingview chart of TDH Holdings stock price 04-11-2021
Source: Tradingview

TDH Holdings stock price rallied 74.26% to trade at 44.13, rising from Wednesday’s closing price of $2.37.

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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