It has been a horrible past couple of weeks for the Credit Intelligence Ltd [ASX:CI1] share price with the release of disappointing half-year results and its recent capital raise.
At time of writing the CI1 share price is flat at 4.1 cents per share after falling 44% over the past two-and-a-bit weeks.
The CI1 share price soared in the lead up to its half-yearly report and on the announcement it would commence ‘buy now, pay later’ (BNPL) activities.
Although the actual release of its half-year report sent the Cl1 share price down 17%.
And it has continued to fall up until today.
Can a capital raise be that bad?
On Friday, CI1 said it had received firm commitments to raise $6 million, which it will use to fund the expansion of its YOZO BNPL and debt restructuring businesses into the UK and other global markets.
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Private company Clee Capital Pty Ltd is said to have given commitments to CI1 to raise the $6 million.
As part of the raise the company will issue 150,000,000 shares at 4 cents per share.
And for every two new shares the company proposes to issue one free attaching option with an exercise price of 10 cents per share and an expiry date of 24 months from date of issue.
Which could be why the CI1 share price is trading at its current level.
Because CI1 has, in essence, valued its own share price at a steep discount to what it was previously trading at.
Although, a price of 4 cents per share is really just a slight discount to its volume weighted average price of 4.3 cents per share.
Given the massive price volatility recently, I think the VWAP could be a better metric to go off at this time.
Outlook for Credit Intelligence
It is difficult to point to what exactly drove the spectacular rise and fall of CI1 over the past couple of weeks.
However, if we were to ignore its recent price action the CI1 share price is still up about 41% over the past 12 months.
Gains that can be justified too.
Profit for the half year was up 42%.
And revenue grew by 21% compared to the previous period.
Now, whether investors were expecting better results given how businesses struggled during the pandemic (meaning more bankruptcies for CI1 to potentially profit off) or threats of heavier regulation in the BNPL space scared them off, is difficult to say.
With shares trading at the 3-cent mark at the beginning of last month, this kind of share price action is not uncommon.
The recent cap raise could see shares firm up around the 4-cent mark as we await further updates about its overseas expansion plans.
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For Money Morning