Shares of CBD company Zoetic International PLC (LON: ZOE) rallied 9.45%, extending Friday’s rally of a crucial support level, indicating that the recent selloff might be over.
Zoetic shares have been falling since hitting a high of 108.5p apiece on 9 March 2021 as bearish traders took control of the price resulting in a downtrend that saw shares fall to a low of 57.5p Thursday last week.
The company’s shares reversed course and headed higher from the 57.5p level, which is a crucial support level in place since December 2020.
Zoetic shares rallied higher today despite raising £6 million via a discounted share placement, valuing each new share at 60p each, a slight discount to Friday’s closing price.
Investors supported the move since the funds raised would be used to retire a financing facility with LDA Capital saving the company the added costs of paying interest on funds raised via the loan facility.
It is always better for a company to raise money via a share placement instead of a loan facility that has to be repaid with interest. The money raised from a share placement is equity and belongs entirely to the company without paying back or attracting interest.
Zoetic intends to use the funds to launch more CBD brands and expand to revamp its direct-to-consumer website making it easier for its customers to purchase products.
The new shares issued have attached warrants exercisable in future at a target price of 120p, demonstrating investor confidence in the company’s prospects.
Zoetic International share price.
Zoetic International shares rallied 9.45% to trade at 70.05p, rising from Friday’s closing price of 64p.