Why is the Weebit Nano share price sinking 12% today?

The Weebit Nano Ltd (ASX: WBT) share price has returned from its trading halt and sunk deep into the red.

In morning trade, the semiconductor company’s shares are down 12% to $4.89.

Why is the Weebit Nano share price sinking?

The weakness in the Weebit Nano share price has been driven by the company undertaking and completing an institutional placement.

According to the release, the company has raised $45 million via fully underwritten institutional placement at a 9.7% discount of $5.00 per new share.

Management advised that the proceeds of the offer will fund the further development and commercial roll-out of Weebit Nano’s ReRAM technology. It also expects it to support further development to solidify its competitive advantages in both the embedded and discrete markets.

In addition, management notes that the funds will allow Weebit Nano to capitalise on the significant opportunities within the Non-Volatile Memory (NVM) market as it progresses its commercialisation strategy with leading global foundries and potential customers.

The company will now seek to raise a further $10 million from retail investors at the same price via a share purchase plan.

Management commentary

Weebit Nano’s CEO, Coby Hanoch, commented:

The strong level of support shown by new and existing sophisticated and institutional investors in Australia and offshore reflects our technical progress over the past year and the significant market opportunities for our proven innovative memory technology. We are delighted to welcome new institutional investors to our register from Australia and offshore, and take great pride that these experienced technology investors are supporting Weebit’s ground-breaking technology.

Hanoch appears optimistic that the funds raised will be a big boost to its future plans. He adds:

Our first ReRAM product is now available to customers through SkyWater Technology, and we are in advanced discussions with most of the world’s leading fabs and integrated device manufacturers. Funds raised, combined with our strong balance sheet of approximately $45 million cash at the end of December 2022, ensure we are well-placed to transfer and qualify our ReRAM technology in Tier-1 fabs and foundries to capitalise on the growing global need for faster, better performing memory technology. Our ReRAM has already demonstrated it is able to scale to smaller geometries for more advanced applications, and has significant competitive advantages over both the existing memory technology and other emerging players.

Time will tell if this is another meme stock like Brainchip Holdings Ltd (ASX: BRN), or something with more substance.

The post Why is the Weebit Nano share price sinking 12% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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