Towerstream Corporation (NASDAQ: TWER)
Towerstream has had a rough go in the market for some time now. However, recently, the company has made moves that are allowing it to survive. We recently saw a reverse stock split; now it looks like we’re going to see some fund raising. However, there’s a big question to be answered here. Is the company merely surviving? Or is it putting itself in a position to thrive? Today, we’ll talk about the reverse stock split, the offering that is expected to generate proceeds of around $3 million, and whether or not TWER is setting itself up in a position to be thriving down the road.
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TWER Recently Went Through A Reverse Stock Split
Towerstream found itself in a bit of a pickle recently. The company was under the $1 share price required to maintain listing status on the NASDAQ. Of course, maintaining its listing is incredibly important. As a result, the company decided to do a reverse stock split.
The split was a 1 for 20 split. This means that for every 20 shares of TWER that you owned, you would be given 1 share at 20 times the value. So essentially, the value of each share did not change. What changed was the number of shares. This was drastically reduced, from over 90 million shares to abou 4.5 million shares. In doing so, the company maintained its listing status on the NASDAQ.
New Fund Raising Planned
While TWER was able to maintain its NASDAQ listing, the battle isn’t quite over. By nature, Towerstream’s business requires capital. The company needs to have money in order to install its systems on new towers.
Now, the company is moving toward the second phase of the plan. TWER is planning on raising funds. According to a recent filing, the company is planning on selling nearly 1,000,000 shares. In the filing, we learned that it is anticipating proceeds of around $3 million for the sale of as many as 930,000 shares.
Looking into the details of the filing, TWER is looking to sell each share at a price of $3.20 each. This should lead to proceeds in the amount of $2.98 million gross. Nonetheless, the price of shares may change. In fact, in the filing, it was mentioned that the price was only to be used for calculating the amount of the registration fee. We also haven’t learned if underwriters will have the opportunity to purchase additional shares nor if there are any additional moving parts to the offering.
Now, The Big Question
OK, so Towerstream has maintained its status with NASDAQ. On top of that, the company is planning on raising about $3 million in funds through another offering. However, the big question remains. Is TWER surviving or thriving? The truth is, I have a relatively bullish opinion on the stock. As mentioned above, in order for this thing to grow, capital is required. So, the offering of new shares to raise funds seems like a strong move. Especially considering that the company will need to cover the costs of installing their systems on the newly contracted commercial properties in New York City.
While at the moment, TWER is doing everything it can to survive, if the right moves are made now, it could put itself in a position to thrive in the future. If the company can continue to increase margins and bring on new commercial properties, we should see tremendous growth.
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