Torchlight cashes in on Reddit hype and sells $100 million in new shares after retail traders help drive a 58% surge in the stock price
- orchlight sold $100 million worth of new shares amid retail-trader hype, a new SEC filing shows.
- Shares of the small Texas oil driller tumbled as much as 25% Tuesday after a record rally Monday.
In a June 21 filing with the Securities and Exchange Commission, the small Plano, Texas-based oil driller disclosed the
The company joined the meme-stock ranks Monday when retail traders on popular Reddit investing threads helped drive a 58% rise in the stock. Following the record rally, shares declined as much as 25% Tuesday.
Even so, the recent rise has valued the company at more than $1 billion - a far cry from the $70 million market capitalization it started the year off with, according to Bloomberg data.
Last month, Torchlight warned it might go out of business as it expects more losses going forward, Bloomberg reported, citing a filing. The company did not respond to Insider's request for comment.
Still, Redditors have jumped on the stock, citing the opportunity to make money off the company from dividends and a
The company announced Monday it would extend the closing date for its planned combination with Dartmouth, Canada-based Metamaterial, to June 30 to allow time to pay a preferred stock dividend to Torchlight shareholders on June 25. On top of that, Torchlight has a 26% short-interest volume, and Redditors have been known to target companies with a high rate of bearish bets. Fintel.io said the company was high on a list of likely short-squeeze candidates.
Other companies have also sought a boost from retail traders. Meme-stock AMC Entertainment has completed multiple share sales this year and hopes to hold another one. Meanwhile, clothing retailer Express, deepwater drilling contractor Transocean, and coal producer Peabody, also have announced share sales.
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