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Why is the Douugh (ASX:DOU) share price in trading halt today?

The Douugh Ltd (ASX: DOU) share price is in a trading halt today over a proposed partnership agreement with a leading full service payments company, and capital raising. This follows the company’s ASX debut on 6 October 2020 after a $6 million initial public offering (IPO) at an offer price of 3 cents per share. 

About Douugh 

Douugh is a fintech company, taking an artificial intelligence first approach to disrupting traditional banking. It operates a subscription based financial wellness platform which helps customers spend wisely, save more and build wealth via a smart bank account and Mastercard debit card. 

The Douugh share price more than doubled on its ASX debut to close at 7 cents but that was just the beginning of a run to a peak of 49 cents just two weeks later. The Douugh share price was trading at 26.5 cents at close of trade yesterday.

The company is currently in the early stages of establishing its presence in the US and Australia. On 17 November, Douugh announced its official launch in the US after a successful 18-month beta trial. Its go-to-market growth strategy will be its utilisation of Google’s AI-powered ad bidding platform to target profitable customers. In addition, the introduction of a viral member-get-member affiliate distribution channel to grow the community via word-of-month, and expanded marketing program across online and social media platforms. The company indicated that 45.5% of its IPO funds would be allocated to marketing. 

Douugh will now look to scale up its US customer base. Features such as Autopilot and Investment Jars will be rolled out in the coming months, prior to the introduction of a monthly subscription fee. 

Capital raising right after IPO? 

Pointsbet Holdings Ltd (ASX: PBH) is an example of a company that initiated a capital raising just months after its IPO. Pointsbet debuted on the ASX in mid June 2019 after it raised $75 million at an offer price of $2.00 per share. Four months later, the company raised another $122.1 million to support product development, US business development, marketing and client acquisition.  

Proposed partnership agreement 

Along with the capital raising, Douugh today announced a proposed partnership agreement with a leading full service payments company. An example of a classic leading full service payments company that many ASX fintech companies have partnered with is PayPal.

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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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.

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