At time of writing, shares of DigitalX Ltd [ASX:DCC] are down by 8.99%, trading at 81 cents apiece.
The DigitalX share price has been in a slide over the last 12 months since the 2017 crypto boom faded from the market.
You can see how closely the company’s fate is tied to the crypto market in the following chart which matches up DigitalX (the magenta line) with the bitcoin price (candlesticks) since the start of 2017:
The latest news out of DigitalX is that its Share Purchase Plan (SPP) has closed significantly oversubscribed. We will examine its prospects going forward.
DigitalX share price dips following SPP
After solid gains in the last two trading sessions, today’s dip in share price could be interpreted as short-term holders engaging in profit taking.
Even the most successful capital raisings sometimes see a share price dip upon completion.
For long-term holders though, the oversubscribed SPP could be a welcome omen as the company now has a sizeable war chest at an opportune moment.
The SPP raised a total of $2.46 million and the company elected to accept SPP oversubscriptions.
It also received ‘firm commitments’ for an additional $1.29 million via a Top-Up Placement for a total of $3.75 million.
Managing Director Leigh Travers hailed the SPP saying:
‘Our aim with the SPP was to allow our loyal shareholders the opportunity to increase their holdings in the Company on favourable terms. We appreciate the support we have received from our shareholders and look forward to providing updates in due course.’
The money is intended for further ‘evaluation of potential investment and acceleration opportunities and for general working capital.’
Will DigitalX catch the next crypto wave?
For those unfamiliar with DigitalX, the company offers ‘full stack blockchain technology expertise’.
This includes its core services — consulting, token sale advisory and asset management (it also has a media and education division).
In terms of business structure, at a base level, it piggybacks on movements in the crypto sphere.
More interest and more money in the sector translates to a better bottom line for DigitalX as can be seen in the chart we presented earlier.
Operating in Perth, New York and Sydney, the company posted a tidy profit of just over US$8 million in 2017.
2018 was not as successful as the crypto boom waned and it eventually posted a consolidated loss of nearly US$4 million.
That being said, bitcoin et al. appear to be on the cusp of another significant bull-run with the bitcoin recently breaking through the US$8,000 dollar barrier after hitting a low of US$3,128 on December 15, 2018.
With cash now in hand and big movements in the cryptosphere potentially taking place, the company appears well positioned for another run.
It is also worth noting that its balance sheet as of 31 December 2018, it listed digital assets of US$2.49 million.
These could appreciate in the coming months, adding to its coffers.
This is a snapshot of its holdings in February:
Definitely something to consider if you are looking at investing in DigitalX.
Finally, make sure to check out our crypto expert’s long-term look at bitcoin’s future in this free report. Sam Volkering has the inside scoop on the market.
For Money Morning