Why did this ASX AI stock just crash 21%?

Investors just sent this ASX AI stock tumbling by more than 21%. But why?

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Despite the phenomenal success of generative artificial intelligence chip maker Nvidia Corporation (NASDAQ: NVDA), it's been a mixed bag for ASX AI stocks so far in 2024.

Turning our eyes to today's action, Bigtincan Holdings Ltd (ASX: BTH), which provides AI-powered sales enablement automation platforms, is taking a beating.

Bigtincan shares closed last Friday trading for 14 cents apiece. The stock then entered a trading halt pending today's announcement on the outcome of the institutional component of the company's capital raising.

Investors responded by sending the ASX AI stock crashing 21.4% to 11 cents a share in the first half hour of trade.

Trading in Bigtincan shares was then paused once more pending a further announcement.

That announcement was released just after noon AEST today.

Here's what's happening.

ASX AI stock smashed on dilutive capital raising

Yesterday, when Bigtincan shares were in a trading halt, the company announced it was conducting a $20.5 million equity raising to support its ongoing operations and growth plans.

The ASX AI stock came under heavy selling pressure when trading resumed this morning. That's because Bigtincan is conducting the fully underwritten 1 for 3 accelerated pro rata non-renounceable entitlement offer at an offer price of 10 cents per share. Or almost 29% below Friday's closing price.

Management said the new funds will be invested in "core AI technology, data infrastructure related to provisioning of its GeneiAI technology, market awareness and development, working capital and transaction costs".

Today, Bigtincan reported the successful completion of the institutional component of the offer had raised around $10.0 million. This saw some 100.3 million new shares being issued.

The retail component of the ASX AI stock's capital raise opened this morning and is expected to bring in another $10.5 million before costs. That offer is also at 10 cents per share, which is adding to the selling pressure.

What else is happening with Bigtincan shares?

On Tuesday, the ASX AI stock also reported that it had received a confidential, non-binding, incomplete and indicative offer from Vector Capital Management at an indicative offer price of 25 cents per share.

That would represent an almost 79% upside from Friday's closing price and is more than 127% above this morning's share price.

The Bigtincan board noted it would "continue to carefully consider any proposals that maximise shareholder value". They added, "There is no certainty that any such proposals will lead to a transaction."

Indeed.

In intraday trade today, Bigtincan released yet another price-sensitive announcement.

The company reported:

This morning, Bigtincan received a letter from Vector formally withdrawing its previous non-binding indicative proposal and has requested ongoing engagement with the company with a view to a new offer that could be submitted based on those engagements.

The ASX AI stock again resumed trading following the announcement. And it's made up some lost ground.

At the time of writing, the Bigtincan share price is down 14.3% at 12 cents a share.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bigtincan and Nvidia. The Motley Fool Australia has recommended Nvidia. 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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