Why Is Grom Social Enterprises (GROM) Stock Down 30% Today? thumbnail

Why Is Grom Social Enterprises (GROM) Stock Down 30% Today?

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GROM stock: a phone displaying the GROM social network app page in the app store

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Grom Social Enterprises (NASDAQ:GROM) stock is falling on Wednesday after the company revealed details of a private placement.

According to a press release, the company has reached an agreement with an institutional investor. This covers the sale of 1,327,434 shares of GROM stock and warrants to purchase of another 2,323,010 shares.

Grom Social Enterprises notes that each of the shares purchased comes with warrants for another share of GROM stock. These warrants are immediately exercisable for $2.26 per share, which is the same purchase price for units sold in the private placement.

Grom Social Enterprises says it expects to raise $3 million from the private placement when it closes on Jan. 27, 2023. The company will use the funds from the private placement for general working capital and administrative purposes.

Why This Is Dropping GROM Stock

Investors aren’t keen on seeing their stakes in a company diminish alongside stock offerings. As such, it makes sense that the company’s stock would take a beating after revealing plans to sell shares to an institutional investor.

As far as trading goes, Grom Social Enterprises isn’t seeing as much as traders might expect today. In pre-market trading hours today, around 1.4 million shares of GROM stock have changed hands. That’s still below its daily average trading volume of about 2.5 million shares.

GROM stock is down 30% in pre-market trading on Wednesday!

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On the date of publication, William White did not have (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.

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