The Troika Media Group Inc (NASDAQ: TRKA) stock price rallied 61.2% after investors got wind of its plans to withdraw a filing made with the US Securities and Exchange Commission (SEC) to issue new shares filed under a Form S-1.
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Interestingly, the company first informed its decision to withdraw the registration statement that would have allowed it to issue new shares on Friday, February 17, 2023. Still, many investors and traders did not know about the same, which explains today’s overreaction to the news.
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The plot thickens when you consider that Troika Media filed the registration statement with the SEC on April 4, 2022, almost one year ago. The company said it does not intend to raise any monies by issuing new shares and diluting existing shareholders, which fueled today’s rally.
As a result, investor interest in Troika Media spiked to new highs, as evidenced by the over 35 million TRKA shares that had changed hands by writing. Retail investors pounced on the stock given its low share price and low float, which makes it susceptible to significant price moves.
By withdrawing its registration statement, Troika’s management team reassured investors that it has no plans to dilute current shareholders, demonstrating their confidence in the firm’s prospects.
It is also impressive that the registration statement was filed almost a year ago. Yet, Troika has never felt the need to exercise it by issuing new shares as stipulated in the document. Still, investors should be careful when buying Troika shares because the company is a penny stock.
Generally, penny stocks are volatile and oscillate between significant gains and losses. Investors must be aware of this characteristic when investing in such stocks.
*This is not investment advice.
The Troika Media (TRKA) stock price.
The Troika Media (TRKA) stock price rallied 61.2% to trade at $0.3548, from Monday’s closing price of $0.2201.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.