Novogen (NVGN) Stock | Why We’re Seeing The Declines Today

Novogen stock news NVGNNovogen Limited (ADR) (NASDAQ: NVGN)

After a relatively strong day in the market yesterday, Novogen stock fell hard this morning following an announcement by the company. NVGN will be issuing new shares in a large private placement. Today, we’ll talk about the private placement, why it’s causing the value of the stock to fall, and what we can expect moving forward.

NVGN Announces AU$15.5 Million Private Placement

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Novogen entered into a definitive agreement today with institutional investors in the United States. The agreement entered into states that NVGN will issue approximately 51 million ordinary shares for a gross price of around AU$15.5 million. The placement is expected to close on or around April 24th, 2015. There is also attaching options talked about under the placement; however, these options are subject to shareholder approval.

Why This Is Driving Novogen Stock Value Down

This is a classic case of share dilution. Think of it this way. You’re making a glass of chocolate milk, and didn’t use enough syrup. So, all you taste is milk. Essentially, Novogen is adding more milk to the glass; diluting the chocolate within. As more shares are issued, the value of the company is split into more pieces; ultimately driving the value of each individual share down.

What We’ve Seen So Far Today

As mentioned above, NVGN is hurting in the market today. As soon as the market opened, the stock fell hard; declining from $9.23 to $7.25 per share by 9:30. Since then, we’ve seen very slight upward growth, but nowhere near enough to call it a recovery. Currently (), Novogen is trading at $ per share after a loss of % so far today.

What We Can Expect To See Moving Forward

Share dilution is never fun. We saw GENE struggle with the issue earlier this year; which they haven’t fully recovered from. With that said, I’m not expecting to see much positive news in the short term outlook. However, in the long run, the company seems to be a great investment option. At this point, it’s going to all be about catching the stock at the support level and riding it to the top from there.

What Do You Think?

Where do you think NVGN is headed and why? Let us know in the comments below!

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