The Nearmap Ltd (ASX: NEA) share price has failed to follow the market higher today and is dropping lower.
At the time of writing the aerial imagery technology and location data company’s shares are down 1.5% to $2.22.
This means the Nearmap share price is now down 28% since the start of the month.
Why is the Nearmap share price down 28% in September?
As well as coming under pressure from the tech selloff this month, investors have been selling Nearmap’s shares after the launch of a capital raising in the middle of the month.
Nearmap launched a fully underwritten institutional placement to raise $72.1 million and a non-underwritten share purchase plan which is aiming to raise a further $20 million. The institutional placement was completed at a 4.2% discount of $2.77.
While these funds are being raised to support its growth plans, I suspect some investors were caught by surprise by the capital raising. Especially after the company worked so hard to become cash flow positive in FY 2020. This appeared to be an indication that further dilutive capital raisings wouldn’t be necessary.
Should you buy the dip?
One positive from this disappointing share price decline is that it has brought Nearmap’s shares down to an attractive level.
I’m not the only one that thinks this is the case. Earlier this month analysts at Citi put a buy rating and $3.15 price target on the company’s shares. This price target implies potential upside of 42% over the next 12 months.
Citi believes Nearmap’s transition to an insights and analytics provider is a good move and appears confident in its growth trajectory.
Elsewhere, Morgan Stanley is also positive and has an overweight rating and $3.00 price target and Goldman Sachs has a neutral rating and $2.95 price target.
The general consensus, therefore, is upwards from here for the Nearmap share price.
Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.