Western Digital Corp (NASDAQ: WDC)
Western Digital Corp is having an incredible day in the market after announcing that it has reached an equity agreement with the Chinese company, Unisplendour (Unis). Today, we’ll discuss the terms of the equity agreement, how the market is reacting to the news and what we can expect to see from WDC moving forward.
Western Digital Corp Reaches Equity Agreement
Western digital corp has announced that they have reached an agreement with Unis. Under the new agreement, Unis will make an equity investment in WDC in the amount of $3.775 billion. The agreement sets a price on the equity of $92.50 per share, which represents a premium of about 34% over the previous session closing price on the stock. As a result of the agreement, Unis will hold about 15% equity in the company.
How The Market Reacted To The News
First, I would like to say that this is a great deal for WDC and its investors. Any time we see good news about a publicly traded company, we can expect to see gains in the market. That’s exactly what we’re seeing. Currently (1:31), WDC is trading at $78.51 per share after a gain of 14.00% following the news.
What We Can Expect To See Moving Forward
Moving forward, I’m expecting to see more overwhelmingly bullish activity out of WDC. However, it is worth mentioning that price movements in the market tend to happen through a series of overreactions. While the news of the equity investment is positive news, the stock is seeing dramatic gains today. So, we can expect to see a bit of a correction tomorrow that will bring WDC down to a more sustainable rate. However, after the correction, I’m expecting to see slow and steady gains. The reality is that the new equity agreement gives WDC more capital to work with that will allow them to fund further projects. Also, through the equity agreement, the company has proven that its shares are worth quite a bit more than what they are trading for. All in all, I believe that this disk drive maker and its investors have plenty more by way of good news ahead.
What Do You Think?
Where do you think WDC is headed and why? Let us know your opinion in the comments below!
[Image Courtesy of OPPTrends]