Location Based Technologies Inc (OTC:LBAS) has been providing a lot of speculative opportunities to the market participants lately.
LBAS made nearly a 500% jump in just three days at the beginning of June. After the skyrocketing sessions, LBAS had reached $0.525 per share but immediately after that a sharp correction drove the prices down to $0.275.
But this was not the end of the highly volatile period of the stock. Around the middle of June LBAS recuperated back to $0.525 per share. The last two sessions of LBAS had also added to the stock volatility.
On Thursday, LBAS went on a bearish frenzy after the stock opened the session with a serious gap down. Throughout the session the LBAS dropped down to the previous low of $0.27 but managed to regain some of its value at the end of the session.
Yesterday, in contrast to the previous bearish session, LBAS made a significant spike of nearly 27% at $0.47. With such drastic rise and falls, LBAS has delivered a dramatic two month performance in which a lot of wealth changed hands.
On Thursday, LBAS announced the closure of a $10 million private placement of common stock. 50 million share were sold to institutional and accredited investors at a price of $0.20. Without the placement agent fees, the total amount of money collected by the company was $8.998 million. [BANNER]
This type of news usually have a dual effect on the company stock. On one hand, LBAS will have a serous source to finance its activities. From another point of view however, the 50 million shares sold in the private placement represent a dilution threat to the current shareholder.
The 50 million placed shares being sold at $0.2 per share means that they a currently deep into the money and they can hit the market at any time until the stock market value remains above $0.2.
So, investors who bet on the long side will have to hope that the money provided by the placement will be utilized in most effective manner which will bring more value to the company.
