DatChat Stock Slumps On Announcing Common Stock Offering At Discount Following Tuesday’s 350%+ Surge: Retail Cries Foul
By Stocktwits Inc | First Published Jan 8, 2025, 9:33 PM ISTDatChat stock is still far off its post-initial public offering (IPO) high of $185, which it hit shortly after its Aug. 2021 listing.
Shares of New Brunswick, New Jersey-based DatChat, Inc. ($DATS), a secure messaging metaverse and social-media company, plunged sharply early Wednesday following an announcement concerning a registered common stock offering.
DatChat stock tumbled 63%, paring some of the 355.61% gains it notched up on Tuesday.
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The rally, accompanied by over 43 times the average volume, came despite a lack of any significant catalyst and took the stock to a new 52-week high of $9.34. General optimism about conditions improving under the incoming Donald Trump administration may have contributed to the strength.
DatChat subsidiary Dragon Interact, which develops artificial intelligence (AI)-driven gaming and media, announced in late October the launch of Trump Trivia, an AI-generated podcast focused on the Trumps.
In early December, the company said it had been awarded a new U.S. patent supporting its Myseum platform, which is scheduled to launch in the first quarter of 2025. Myseum is DatChat's social media platform designed for securely and permanently storing and sharing digital media content.
DatChat stock is still far off its post-initial public offering (IPO) high of $185, which it hit shortly after its Aug. 2021 listing.
The company capitalized on the recent stock surge by announcing securities purchase agreements with institutional investors to sell an aggregate of 1.2 million shares at a purchase price of $4.25 per share in a registered direct offering priced at the market.
The offering, expected to close on or about Jan. 10, 2025, will raise gross proceeds of $5.1 million. The company plans to use the proceeds for working capital and general corporate expenses.
Following the announcement, the shares traded lower by 62.97% to $3.31 The stock was among the top ten trending tickers on Stocktwits.
DatChat stock watchers on the platform were largely bearish, calling the sell-off a ‘’rug pull.”
Another called out pumpers for inflating the stock to get out of it and warned fellow retailers to stay out of it. Short interest in the stock is elevated, with the short percentage of outstanding shares at 12.07%.
DatChat stock lost about 38% in 2024.
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