According to a press release, the company is selling 24,193,548 shares of GSMG stock to two institutional investors. These shares are being sold for $2.48, which brings the gross proceeds of $60 million the company is expecting.
Glory Star New Media notes that the purchase price is based on the privatization price of $1.55 approved by shareholders back in November. It also includes a 60% premium that was agreed on by the company and the institutional investors buying the shares.
While the company has announced the details of the private placement, it isn’t happening just yet. The company expects the private placement to be completed on or about May 9, 2023.
How This Affects GSMG Stock
Investors are reacting well to news of the private placement today. That’s resulted in more than 11 million shares of the company’s stock changing hands as of this writing. To put that in perspective, the company’s daily average trading volume is closer to 145,000 shares.
To be clear, GSMG is a penny stock. That comes from its low trading price of 48 cents when markets closed yesterday, as well as its market capitalization of $32.7 million. That means it’s susceptible to volatility. It wouldn’t be surprising to see it give up some of today’s gains throughout the week as it comes off this rally.
GSMG stock is up 152.08% during pre-market trading on Tuesday!
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On the date of publication, William White 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.