NEW YORK (TheStreet) -- Speed Commerce (SPDC - Get Report) stock stumbled over Tuesday's session after closing its private offering of preferred stock. The e-commerce platform developer said it had closed the offering with institutional investors for around $10 million worth of Series C preferred stock. The company sold an aggregate of 3.33 million shares of preferred stock and five-year warrants to purchase up to 833,333 shares of common stock for $3 a share.
"The net proceeds of the offering will be used to pay down indebtedness and for general corporate purposes," the company said in a statement.
By market close, shares had fallen 11% to $3.15.
Separately, TheStreet Ratings team rates SPEED COMMERCE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate SPEED COMMERCE INC (SPDC) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 10740.0% when compared to the same quarter one year ago, falling from $0.01 million to -$1.06 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, SPEED COMMERCE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$23.78 million or 367.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for SPEED COMMERCE INC is currently extremely low, coming in at 12.16%. Regardless of SPDC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.58% trails the industry average.
- Despite currently having a low debt-to-equity ratio of 0.56, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.70 is weak.
- You can view the full analysis from the report here: SPDC Ratings Report