Flat out undervalued right now!
I've seen this exact scenario play out many times with similar public companies doing similar new equity raises. For whatever reason, there is an initial reaction of the price falling below the new deal price ($1.65/ share in our case; also happened on previous equity raise at $4.47? when stock fell into the $3.50ish range in short term).
In a post the other day, I predicted this stock would fall into the $1.20s, only on the basis of similar observed patterns. It's a great price!!! Consider that the $1.65/share deal is a sweet heart deal that didn't really need to be sold, it was buttoned up instantly. So, that is the real baseline now, and interestingly, this equity deal raises the tangible book value from before the deal.
The price will probably linger around where it is right now for a short period of time, and then begin a gradual ascent to the $1.65 range. From there, it might move gradually upward and over $2...
Then, at some point, we should get some favorable news of a partnership deal and the stock will pass $5, IMHO...
While the dilution sucks, we still have less that 50 million shares all in, and that still isn't much relative to the potential... It's a long game, but we have an opportunity to draft behind this current equity placement at a price below what they (a sophisticated group) are paying... I recommend taking advantage of it!
