Things aren't looking too rosy for the Zip Co Ltd (ASX: Z1P) share price these days. At the time of writing, Zip shares are trading at $1.44 each, down 1.23% for the day thus far. That's only a whisker away from the company's 52-week low of $1.40 a share that we saw only last month.
But some big changes are coming to Zip shares next week, changes that all shareholders should be aware of. Earlier this week, the buy now, pay later (BNPL) company announced the results of its recent share purchase plan (SPP). This SPP was offered to retail shareholders, who were given the option of purchasing up to $30,000 additional Zip shares.
This was offered at either the lesser price of $1.90 per share, or at "a 2% discount to the volume-weighted average price of Zip's shares traded on the ASX during the five trading days up to and including Friday, 1 April 2022 (being the date the offer closed), rounded to the nearest cent".
The latter option ended up being the lesser of these two, so Zip confirmed the share price offered would be $1.48.
Zip share purchase plan leads to 16 million new shares
Unfortunately for any investor who subscribed to this plan, the company is today trading below that value. So it's perhaps no surprise that Zip only managed to raise $23.99 million of the $50 million that it had on the table.
Zip had told investors that it intends to use this extra capital to shore up its balance sheet. In addition, it will also use the capital to "position Zip for sustainable growth by providing more capital runway to execute on potential synergies [resulting from the proposed merger with Sezzle Inc (ASX: SZL)]".
This means that, come Monday (11 April), 16.21 million new Zip shares will hit the ASX boards.
So what does this mean for the Zip share price? Well, additional shares are rarely a good thing for a company's share price on a purely numerical basis. That's because the laws of supply and demand dictate that an increase in supply results in a fall in price. If investors are enthusiastic about what a company intends to raise capital for, it can overcome this inherent weakness that new shares bring. But, unfortunately in this case, this doesn't seem to be playing out.
At the current Zip Co share price, this BNPL share has a market capitalisation of $990.2 million.
