Appen Ltd (ASX: APX) shares finished the session on Thursday up 6.49% to $2.46 per share.
They've had a 14% bump over the past five trading days, although, in the middle of that, they dropped like a stone to a seven-year low of $1.91 after coming out of a trading halt on Wednesday.
Okay, that's gonna take some explaining. We'll get to that in a minute.
Bigger picture, the thoroughly bloodied and beaten-up ASX tech share is actually in the green for the year to date, up 4.24% despite all its woes.
While it's still in tumultuous territory, could the bleeding be over for this former market darling?
What's going on with Appen shares this week?
Appen shareholders could seek some solace from Zip shares investors these days.
Both stocks are in the doghouse, down more than 90% from their peak prices reached just a few years ago.
But both of them have zoomed higher this week, prompting speculation that the worst may be over.
Hmmmm. Let's review the week's Appenings.
On Tuesday, Appen requested a trading halt and announced a $60 million capital raising.
The offer was $1.85 per new share, which is one heck of a discount.
It's almost 25% lower than yesterday's closing price and more than 40% lower than where Appen shares were before last Wednesday's calamitous trading update.
(That update sent the Appen share price spiralling 28% in one day from $3.19 to $2.29.)
Also on Tuesday, the company released an investor presentation to sell the capital raise to institutional and retail investors, and to explain its strategy for a refresh.
The company said the funds would pay for one-off costs associated with its cost reduction program, provide balance sheet flexibility, and general working capital to support its return to profitability.
Before the market open on Wednesday, Appen informed the ASX that it had completed the $21 million institutional component of its equity raising.
Appen's CEO Armughan Ahmad said:
Appen is delighted with the successful outcome of the Institutional Component of the Equity Raising and the support received from both existing and new institutional shareholders.
We look forward to executing on the vision we have communicated to the market and delivering results for our shareholders.
Less than an hour later, the tech share resumed trading and flatlined at the open, dropping 17% to $1.91.
That's the lowest price Appen shares have traded at since their pre-WAAAX club days in 2016.
Appen shares hit a new low but bounce back hard
Interestingly, the stock rebounded over the day and finished the session on Wednesday at $2.34.
You got that? Appen shares dropped 17% at the open… then finished the day 0.4% higher than Tuesday's halted share price.
Talk about a rollercoaster ride.
Anyway, with the $21 million institutional part done, the $38 million retail entitlement offer will commence on 23 May and close on 6 June.
Approximately 32.2 million new Appen shares will be issued under the equity raising. That represents about 26% of Appen's existing shares on issue.
That's a fair bit of dilution for existing shareholders to stomach.
What do the brokers think?
As reported in The Australian, top broker Bell Potter has responded to the news of the capital raising by increasing its rating on Appen shares to hold.
But its 12-month price target of $2.20 is lower than where Appen shares are currently trading.
So that's not very inspiring for investors.
Last week, before the capital raise was announced, my Fool colleague James reported on how a few other brokers are thinking in relation to Appen shares.
The Morgan Stanley team had retained their underweight rating and cut the price target on Appen shares to $2.
The broker appeared uncertain about how Appen will be able to generate revenue growth while also cutting costs.
Macquarie analysts had downgraded Appen shares to underperform and cut their price target by more than half to $1.18.
This was largely due to the broker expecting Appen to perform poorly for a while.
Based on Macquarie's valuation alone, it looks like this week's seven-year low of $1.91 may not be the bottom for Appen shares.
