- Digital Brands Group, Inc. (NASDAQ: DBGI) ("Digital Brands" or the "Company"), today announced the underwriters of Digital Brand's previously announced public offering that initially closed on May 18, 2021 have purchased an additional 361,445 shares of common stock pursuant to the exercise by the underwriters of the remaining portion of their over-allotment option at a public offering price of $4.15 per share. Digital Brands has now sold a total of 2,771,084 shares of common stock and warrants to purchase 2,771,084 shares of common stock for aggregate gross proceeds of approximately $11.5 million, prior to deducting underwriting discounts, commissions, and other offering expenses. Can someone please explain this to me ??? I dont get it but i know it can move this stock . Bc its 6/29 and the stock is up ... I think it should be down . Im so confused. Does this mean the the underwritters purchased more stock that can be excerised, like options, at 4.15? The current float is at 5.17 million .. So if 2,771,084 common stocks and warrants are sold at 4.15$, doesnt it mean a tremendous amount of dilution can occur??? Sorry Im a newbie whose just very confused with the lingos and stuff.
%% Good volume on that. BUT price moves weekly from $4 to$8 area. WALL street is having problems with a fair price. REALLY, there is so little price data on that IPO; most likely big swings in weekly closes. YTD % = +60.47%, so most trends are up, cash clay.,
What it says is the promoter of its IPO's themselves exercised their options to buy an additional 361,445 shares at the IPO price of $4.15 a share which brings the total amount of shares sold to 2,771,084 shares of common stock and warrants to purchase 2,771,084 shares of common stock for aggregate gross proceeds of approximately $11.5 million gross. Looks to me the company is a promoter of fashion knock-off's which is a diamond a dozen nowadays on the market with again China in the lead in both quality and quantity due to its tremendous amount of cheap labour and abundant of textile resources (think of Xinjiang cotton and silk from the South). So not sure if the company has much of a future even if US completely blocks Chinese imports. The price has since dropped from the $8 high to now $5.XX which is not much changed from its IPO price even with the buyings from the underwriter.
Thank you . So basically its just saying that they purchased these options at 4.15? So that means in the future there can be a further dilution 2.7 millions shares?
im really confused. because they purchased a total of 2,7 million shares and warrants at 4.15 or at the IPO pricing. so if some of them are warrants wouldnt it mean that further dilution can happen when they go to sell the warrants?
The current total includes those purchased by the underwriters. The total number of shares which comes with a warrant sold via is roughly 2,409,639 at $4.15 per share and the entire proceeds was $10 million gross. And then the underwriters bought 361,445 shares AND warrants so now the gross proceeds is roughly $11.5 million with an outstanding 2,771,084 shares and warrants. So assuming that all of the warrant holders decide to exercise their warrant and purchase the shares, then yes an additional 2,771,084 shares can be bought potentially and in theory. But few things you need to keep in mind, the exercise price for the warrant is $4.57, not at $4.15 and the warrants expire at the end of 5 years. So the price of the stock has to be at least $4.57 within 5 years to have the exercising of the warrants to be worthwhile otherwise they will just expire worthless. And plus the warrants are public traded also on NASDAQ so if the underlying is trading at higher than $4.57, higher than the exercise price before the expiration date, then chances are those warrants might be trading at higher than the difference between $4.57 and the underlying price so the holder might just sell the warrants instead to make an instant profit instead of exercising since they basically got the warrants for free with the IPO. So the "dilution" that you are thinking about may not occur as much as what you expect. Everything will depend on how the stock will do.
When the warrant is sold, there will be no exercising by the holder of the warrant who sold it. They will only be converted to shares if they are worthwhile to do so.
Buy the stock. I like it. $5.45 pre-market. It'll drop, anywhere around $5.18 would be a good daytrade long, but this one looks like a buy and hold. More to follow. Thanks for the tip.
Thats what i was worried about. it being converted to shares and then dilution occuring . but aafter reading a reply on this post i have a much clearer understanding its not really perhaps the dilution that im thinking of .