MYM Stock Falls After Further Stock Issuance, What’s Next?

MYM stock

After climbing almost 90% last Tuesday, July 2, MYM stock reached $0.53 CAD at its peak. By Friday, shares began correcting and dropped 23.5% to finish the day at $0.41 CAD per share. With the sudden movements, MYM Nutraceuticals (CSE:MYM) (OTCQB:MYMMF) caused a stir.

But it’s Monday again, and the market is open for another week, so can traders expect the downward trend to continue? It was looking so promising.

MYM Stock Correcting

We still don’t know what caused shares to surge last week. What we can surmise, however, is why they began to fall again. On Friday, the company announced a “$6 million non-brokered private placement of up to 18,518,519 units at a price of CAD$0.324 per unit.”

In other words, MYM Nutraceuticals is selling more stock to raise capital. Investors have reacted to the news, no doubt fearfully, regarding the increased number of outstanding MYM stock.

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The capital raised will go towards “general working capital” and funding the company’s “2019 Strategic Plan.”

The Issue with Stock Increases

You don’t have to be a genius to understand the frustration with companies issuing more stock. The most concerning aspect is stock dilution. Effectively, the total number of shares outstanding will increase, and this can dilute the value of existing shares.

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But also when a company is raising money for “general working capital,” the suggestion is that it’s been a struggle funding operations on its own steam. This is an obvious red flag.

Where MYM stock will go from here is anyone’s guess, but shares reacting further to this news is probable.

About MYM Nutraceuticals

Formerly known as My Marijuana Canada Inc, the company changed its name to MYM Nutraceuticals Inc in February 2016. With headquarters in Vancouver, Canada, MYM develops and markets hemp-based cannabidiol (CBD) extracts along with oil-infused nutraceutical products. For those not in the know, nutraceuticals are foods that also serve a secondary purpose in assisting the aid of or prevention of disease, i.e. as well as nutrition, they provide a medical benefit.

Currently, MYM stock is selling for $0.40 CAD on the CSE. The company has a market cap of $52.94 million.

Is MYM stock on your radar?

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