Why are investors fighting to buy this speculative ASX stock today?

Weebit Nano Ltd (ASX: WBT) shares are having a strong session on Thursday.

In afternoon trade, the speculative ASX tech stock is up 6% to $3.28.

Why is this speculative ASX stock rising?

Investors have been fighting to get hold of the semi-conductor company's shares today after it announced that it has successfully raised $50 million via a strongly supported share placement to existing and new institutional investors from Australia and abroad.

According to the release, Weebit Nano is issuing approximately 16.7 million new fully paid ordinary shares at $3.00 per new share. Surprisingly, this represents only a small discount to its last close price and a 6.5% premium to its five-day volume weighted average price.

Management believes the strong support from institutional investors, both domestic and international, reflects strong investor demand, and confidence in Weebit Nano's ReRAM technology and its future growth prospects.

It advised that the funds raised will be used to scale up commercialisation activities as part of new customer and partner engagements that are expected to materialise over the coming 12 months, to support working capital needs associated with further technology development, and to strengthen the company's balance sheet.

'Extremely pleased'

The speculative ASX stock's CEO, Coby Hanoch, was pleased with the placement. He said:

We are extremely pleased with the strong support we received from institutional investors. Whilst Weebit had an adequate cash balance, strategically, bringing forward the capital raise puts the Company in a much stronger position. With advanced discussions and negotiations progressing with multiple parties, and our goal to sign multiple foundry and customer agreements over the next 12 months, the strengthened balance sheet provides additional flexibility to pursue new business opportunities on a much stronger footing.

Unfortunately for retail investors, there will be no share purchase plan for legal reasons. Hanoch adds:

Whilst the Board and I would have liked to offer a Share Purchase Plan (SPP) for our retail investors, given the legal requirements of the SPP Offer Price needing to be lower than Weebit's trading price in a specified period, and this Placement being done at a substantial premium to this, we have not been able to offer an SPP at the same price as the Placement on this occasion.

Looking ahead, the CEO believes the company is well-placed for the future following the placement. He explains:

Weebit is uniquely positioned as the market's only independent provider of qualified ReRAM. Our competitive advantages around customisation capability and the expertise of our team means we are extremely well placed in a large and growing market as the industry looks to replace embedded flash in next-generation devices.

We are continuing to see strong interest from foundries, IDMs, and product companies, and we remain confident in our ability to close a commercial deal this calendar year, as well as executing on our 2025 targets which include additional agreements with foundries and product companies.

The post Why are investors fighting to buy this speculative ASX stock today? appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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