Stock for Cadiz Inc. (CDZI) had seen a massive climb in the current market session, this morning, going up 33.71% in less than four hours. A climb of this magnitude comes unexpectedly, shortly after CDZI hit an all-time low on Thursday of $0.62. This negative peak has been the lowest the stock has traded since its initial public offering in 1994. The trigger for this growth spurt correlates with this morning’s press release by the company. The announcement detailed a $12M direct equity funding whilst offering common stock. This injection of funds into the firm, along with its growth prospects has led the market to cash in on this rush, with market participants eager to gain exposure to these rising tides.
Registered CDZI Public Offering
The trigger setting of CDZI’s growth spurt relates primarily to this morning’s equity financing news. The company had announced a registered direct offering to raise $12 million, selling shares at $1.75 each. The set price had reflected market value at the time, which instantaneously saw a shoot up by a substantial degree. Management announced that the funds would be utilized to support projects in California. Given the raging issue of climate change, water scarcity is a global issue that increasingly dominates the news. For a company like Cadiz Inc, dealing in the water supply sector, an investment such as this offers significant growth potential.
Onlookers Skepticism of CDZI Circumstances
A brief scan of social media scatter surrounding CDZI-related developments point towards the high degree of skepticism that is widespread. Given that the decision comes when the stock was at an all-time low raises significant red flags to outsiders. Furthermore, the move was insider led, with $2.5M purchased by board members, and $3.5M by the company’s lender, Riley Securities. Understandably, this poses questions regarding the program, as well as whether or not this poses a principal-agent problem. The offering was further led by Heereema IGS, which holds 35% of CDZI stock, as a passive investor in the company. The move increasingly is claimed to tilt in favor of insiders and institutional investors.
CDZI soared this morning by a substantial degree, turning heads in the market. This links to an announcement earlier this morning of a $12 million registered direct offering. However, social media chatter reveals the skepticism surrounding the move, especially against insiders in the firm.