NEW YORK (TheStreet) -- Wave Systems (WAVX) stock is tumbling Thursday after the company announced its offering of nearly 5.23 million shares of common stock at $1.90 per unit. Investors will also receive five-year warrants to purchase an aggregate of just under 2.1 million shares.
Total gross proceeds of $9.9 million will be used for working capital and general corporate purposes. Craig-Hallum Capital will act as exclusive placement agent for the offering, expected to close June 17.
By late morning, shares had tanked 19.9% to $1.72. Trading volume of 2.5 million shares was more than double its three-month daily average.
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Separately, TheStreet Ratings team rates WAVE SYSTEMS CORP as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate WAVE SYSTEMS CORP (WAVX) a SELL. This is driven by several 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. Among the areas we feel are negative, one of the most important has been weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to -$3.08 million or 120.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- WAVX, with its decline in revenue, underperformed when compared the industry average of 7.7%. Since the same quarter one year prior, revenues slightly dropped by 8.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for WAVE SYSTEMS CORP is currently very high, coming in at 98.57%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -61.76% is in-line with the industry average.
- WAVE SYSTEMS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, WAVE SYSTEMS CORP continued to lose money by earning -$0.72 versus -$1.40 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 67.8% when compared to the same quarter one year prior, rising from -$10.21 million to -$3.29 million.
- You can view the full analysis from the report here: WAVX Ratings Report