Deepverge Shares Dropped 19.6% After Raising up to £12.5 Million

Key points:
Deepverge shares fell 19.6% on plans to raise up to £12.5 million.
The company will invest the proceeds in its Labskin/Skin Trust Club.
So should you buy DVRG shares? Read on to find out.

The Deepverge PLC (LON: DVRG) share price fell 19.6% after unveiling plans to raise up to £12.5 million via a share placement, subscription, and a broker offer. The company revealed it had raised £10 million through an oversubscribed share placement and subscription.

The company issued 471,740,000 new Ordinary Shares priced at 2p each, representing a 20% discount to yesterday’s closing price, reflecting today’s decline in Deepverge’s share price. The broker offer is expected to raise up to £2.5 million from existing and qualifying shareholders. The offer has an initial value of £1 million but can be extended to £2.5 million.

Also read: Best Financial Stocks To Buy Right Now.

The environmental and life science group explained that it would use the funds to repay the loan facility secured in March this year. Most of the funds will be invested in its Labskin/Skin Trust Club, which has grown exponentially since its launch.

Investors’ reaction to the news was expected, given that the new shares were priced at a discount to yesterday’s closing price. However, the significant interest witnessed by the oversubscription to the company’s fundraising shows investors have confidence in its prospects based on recent positive developments.

However, despite making multiple positive announcements recently, Deepvege shares have kept falling and are now down 90.7% for the year amid a broader stock market selloff. As a result, the company has fallen victim to the market’s overall trends despite its business booming.

Deepverge’s employees and management team subscribed to shares worth about £0.5 million, showing their confidence in the company. It is always a good sign to see company insiders buying shares in the firm they work in daily. However, most people would sell their shares if they believed their company was headed for trouble.

So, sould I buy Deepverge shares? The short answer is yes, I would. But first, I would wait for a sign that the shares have bottomed and are ready to reverse course and rally higher. An easy way to do this is by seeing multiple green days.

*This is not investment advice.

Deepverge share price.