The Mobile Streams Plc (LON: MOS) share price plunged 25% after announcing that it had conducted a discounted share placing to raise £1.2 million by selling 400 million ordinary shares for 0.30p each.
Today’s decline reflected the discounted price offered to the investors who bought the newly issued shares leading to the dilution of existing shareholders.
The markets reacted appropriately to the share placement, which indicated that new investors were unwilling to buy shares at yesterday’s closing price of 0.40p. Hence, the company’s shares are definitely worth 0.30p.
Mobile Streams said that it would use the sale proceeds to fund its new joint venture partnership with Gfinity Plc as the two companies collaborate on the Mobilegaming.com website.
The two firms are yet to agree on the deal’s final terms, but Mobile Streams has agreed to take a £250,000 stake in Gfinity’s latest capital raise announced yesterday as a show of faith in their shared future.
Mobile Streams also issued a warrant for each new placement share redeemable at 0.6p each, which would raise the number of ordinary shares issued by the firm to 2.995 billion.
The company is looking to capitalise on the rising popularity of esports competitions and mobile gaming, a rapidly-growing industry segment.
The company has partnered with other leading companies such as Tencent. Additionally, it partnered with Tencent on the PlayerUnknown BattleGrounds (PUBG) Mobile – a Battle Royale (all versus all) anniversary launch in February this year.
Mark Epstein, Mobile Streams’ CEO, said: “The funds raised in this placing will enable us to take advantage of significant revenue-generating opportunities and help us grow the business at a faster rate. We are delighted to have been able to act so quickly to not only secure this opportunity but also add significant funds to the business, which will help us take up further deals as they present themselves. We are now extremely well-funded, and the business is in the strongest position it has been in for years.”
Today’s decline indicates that investors were not very pleased with the latest capital raise, but the company’s prospects remain pretty promising. However, we cannot rule out further dilutions in future.
*This is not investment advice. Always do your due diligence before making investment decisions.
Mobile Streams share price.
Mobile Streams share price plunged 25% to trade at 0.30p, falling from Monday’s closing price of 0.40p.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 68 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .
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