Shares of Helbiz (NASDAQ:HLBZ) stock are up 15% today after the company filed an 8-K with the U.S. Securities and Exchange Commission (SEC) showing that it has entered into a financing arrangement with Yorkville Advisors Global for $5 million.
The financing, which concludes on or after Dec. 8, provides Helbiz with some much-needed capital. Investors are reacting positively to this news and what it could mean for Helbiz going forward. Prior to today, HLBZ stock was down 96% and trading at 24 cents a share.
HLBZ Stock: What Happened
The deal with Yorkville essentially amounts to a capital raise on the part of Helbiz. Investors see this as positive, as it improves the company’s liquidity and should help it sustain operations and fund future growth. This is not the first time that Helbiz has arranged financing through Yorkville Advisors Global. In October, Helbiz received $30 million in funding from Yorkville.
Based in New York City, Helbiz is an urban transportation company that builds and sells scooters, mopeds and other micro vehicles in densely populated cities that struggle with high levels of traffic congestion. The company recently expanded its presence to Los Angeles, California, one of the most densely populated cities in the world.
Why It Matters
The arrangement with Yorkville is the second piece of good news that has sent HLBZ stock higher this week. A few days ago, it was disclosed that company founder and CEO Salvatore Palella bought $750,000 worth of HLBZ stock, increasing his holdings in the company by 72%.
Investors saw the insider share purchase as a vote of confidence in Helbiz. That news, coupled with today’s announcement of a financing arrangement with Yorkville, has investors feeling bullish on HLBZ stock. It is important to note, however, that HLBZ stock could be viewed as a meme stock by retail traders.
In early August of this year, HLBZ stock spiked as high as $1.61 a share before quickly collapsing. Investors should be wary of a similar situation this time around.
HLBZ stock moves sharply higher today on news of the capital infusion, which is positive. However, investors need to keep in mind that the company’s share price has collapsed 96% this year and is trading deep down on the penny stock league tables. Long-term, Helbiz might not be the best of investments.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.