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ToughBuilt shares drop 26% as firm announces $20m stock offering

ToughBuilt shares drop 26% as firm announces $20m stock offering
Dino Kurbegovic

ToughBuilt Industries (NASDAQ: TBLT) ended the Monday, July 25, trading session down by 26.32% after announcing a stock offering. Namely, the offering includes a $20 million private placement priced at a premium to the market under Nasdaq rules, which essentially means that a small group of private institutional investors will get an opportunity to jump into the stock at better prices.  

Moreover, the deal includes the issuance and sale of 4 million shares of common stock and preferred investment options to purchase up to 8 million shares at an offering price of $5 per share and accompanying preferred investment options.

With the placement expected to close on July 27, 2022, each share in the series A preferred investment option gives the option to exercise the right immediately or for a term of three years with the exercise price set at $5. On the other hand, series B preferred investment options grants the same right but at a shorter term of two years. 

Further, the expected $20 million in proceeds will be used for general corporate purposes, including working capital. 

TBLT chart and analysis

Currently, the TBLT trading volumes are considerably higher than the average, with the short-term trend positive; however, more green days are needed for the turnaround in price to become a full trend. 

Meanwhile, the wide trading range between $1.78 and $9.35 over the last month, indicates that a resistance line is at $8.66, while the support is at $5.13, with the stock particularly see-sawing violently over the past few trading sessions. 

In yesterday’s session, the stock fell by 26%, and it’s down again in pre-market trading by 9.35%.   

TBLT 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Finally, the stock has been trading up roughly 105% over the last five trading sessions, mostly due to marked interest on social media and mention of a possible short-squeeze.

Namely, on Reddit, ToughBuilt mentions have increased by over 40%, and the company is now in seventh place among the most mentioned stocks, according to ApeWisdom.  

Despite the run-up and now the stock offering, investors can expect more volatility in the ToughBuilt stock as social media attention brings more speculation and possibly more short selling

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