Stock Market

Hyzon Motors (HYZN) Stock Plunges 50% on Share Offering. What’s Going On?

HYZN stock is also in noncompliance with the Nasdaq’s minimum bid price requirement

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Hyzon Motors (NASDAQ:HYZN) stock is plummeting nearly 50% after the company announced that it had entered into a securities purchase agreement with certain institutional investors in a registered direct offering.

As part of the agreement, investors will purchase 22.5 million shares of HYZN and warrants to purchase 22.5 million shares of HYZN at a combined offering price of 20 cents per share. The warrants have an exercise price of 30 cents per share and can be immediately exercised with an expiration date five years after issuance.

The offering is expected to close on or around July 22 and will provide Hyzon with approximately $4.5 million of gross proceeds. The proceeds will be used toward working capital and other general corporate purposes.

Hyzon has also announced the sale of up to 77.27 million shares from selling stockholders, up to 19.3 million shares upon the exercise of warrants and up to 8.01 million private placement warrants.

Hyzon Announces Registered Direct Offering

The offering comes after Hyzon filed to increase its its authorized shares to 1 billion from 400 million. The measure was approved at its special meeting of stockholders on July 18.

Hyzon needs money in order to operate its business and it is choosing to raise equity capital. That results in dilution for shareholders, as each shareholder’s ownership of the company will decline. As of March 31, the company had $52.40 million in unrestricted cash and cash equivalents. During the first quarter, it used up $59.4 million in operating and investing activities while its revenue was $9.98 million.

That resulted in Hyzon raising substantial doubt about its ability to continue as a going concern for the next 12 months.

HYZN is also trading below $1, putting it in violation of the Nasdaq’s minimum bid requirement rule. In order to regain compliance, HYZN must close at $1 or higher for at least 10 consecutive business days by July 22. That doesn’t seem likely given that the deadline is days away and Hyzon currently trades below 20 cents. With this in mind, the company applied on July 5 to transfer its common stock from the Nasdaq Global Select Market to the Nasdaq Capital Market.

If HYZN successfully transfers to the Nasdaq Capital Market, it will be given an additional 180 calendar days to regain compliance.

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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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