Vection Technologies (ASX:VR1) share price tumbles 12% following trading halt. Here’s why

Here’s what’s driving Vection Technologies’ stock in the red on Tuesday

| More on:
Sad investor watching the financial stock market crash on his laptop computer.

Image source: Getty Images

The Vection Technologies Ltd (ASX: VR1) share price had a roaring time last week, but that has since changed.

The company broke a trading halt to announce a strongly supported $12 million institutional placement this morning. Unfortunately, the market has reacted poorly to the news.

At the time of writing, the Vection Technologies share price is 24.2 cents, 12% lower than its previous close.

Let’s take a look at the latest news from the software company.

Vection Technologies share price flops

The Vection Technologies share price is back in business today after the company announced it has received commitments for a $12 million institutional placement.

Additionally, the company announced its managing director, Gianmarco Biagi, and its director and chief sales operator, Lorenzo Biagi, will be selling a combined 15 million Vection Technologies shares to fund personal obligations. The company noted that represents less than 5% of their aggregate holdings.

Under the placement, mostly tech-focused institutional investors will be purchasing 60 million new Vection Technologies shares for 20 cents apiece. The offer price is equal to Vection Technologies’ stock’s 15-day volume-weighted average price.

Some $10 million of the funds raised through the placement will bolster the company’s balance sheet – bringing its cash balance up to $20 million.

It will also expand the company’s merger and acquisition “war-chest”, helping to speed up Vection Technologies’ global acquisition strategy.

The other $2 million will support its expansion plans and research and development capabilities.

Vection Technologies’ acquisition strategy is targeting the extended reality and metaverse enterprise technology sector. The company expects the sphere will soon house intense competition and its growth strategy will help it emerge as a leader in the space.

Following the placement, 17.2% of the company’s stock will be held by institutional investors. Vection Technologies’ board and management will still own 38.8% of its shares.

The Vection Technologies share price was put in the freezer on Monday as the company prepared to announce the capital raise.

Prior to the trading halt, the company’s stock was on a roll. The Vection Technologies share price soared 37.5% over the course of last week after the company unveiled its metaverse offering.

The metaverse – dubbed FrameS – is expected to be implemented by companies with an at-home workforce. It will allow the creation of digital office spaces.

Should you invest $1,000 in Vection Technologies right now?

Before you consider Vection Technologies, 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 Vection Technologies wasn't one of them.

The online investing service he’s run for over 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 January 13th 2022

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 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