The 4DS Memory (ASX:4DS) share price is plummeting 11% today. Here’s why

What’s moving the memory storage company’s shares?

| More on:
Man in business suit above the clouds plummeting downwards back first

Image source: Getty Images

The 4DS Memory Ltd (ASX: 4DS) share price is one of the worst performers on the ASX today. This comes after the memory storage company announced its capital raising efforts and came out of the trading halt it had been in since Tuesday.

At the time of writing, 4DS Memory shares are down a sizeable 11.86% to 5.2 cents. In the past month alone, its shares have been hit hard by investors, falling a massive 60%.

What’s happening with 4DS Memory?

A catalyst for the steep dive in the 4DS Memory share price today is possibly the fear of an impending share dilution.

According to its release, 4DS Memory has received firm commitments to raise $2.5 million through a share placement.

The offer was presented to both domestic and international institutional investors at an issue price of 4.8 cents apiece. This equates to roughly 52 million new ordinary shares being added to the company’s registry.

In addition, 4DS Memory will offer a share purchase plan (SPP) to existing shareholders to raise a further $2.5 million. The SPP will be offered on the same terms as the placement.

The lead manager, Mac Equity Partners International, will also receive 5 million options exercisable at 8 cents each. This will expire within 2 years from the date of issue.

The funds received from the equity raise will be used towards supporting a number of growth initiatives for the company. This includes:

  • Research and development costs;
  • Working capital; and
  • Expenses of the offers such as the 6% lead manager fee.

The closing date of the SPP offer is set for 14 December, with issuance of the shares on 16 December.

About the 4DS Memory share price

The start of 2021 saw the 4DS Memory share price shoot higher until the end of January, which was followed by a sideways channel.

Although, since mid-August, it has been on a continuing decline, posting a 12-month loss of roughly 65%.

4DS Memory has a market capitalisation of around $67.43 million, with more than 1.32 billion shares on its books.

Should you invest $1,000 in 4DS Memory right now?

Before you consider 4DS Memory, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and 4DS Memory wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Aaron Teboneras owns shares of 4DSMEMORY FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares