Aytu BioScience (AYTU) Stock Falls After Regaining Compliance

Aytu Bioscience AYTU Stock News

Today should be a great day in the market for Aytu BioScience Inc (NASDAQ: AYTU). At least, that’s the case if you read the company’s press release. According to the release, the company has regained NASDAQ compliance. So, why is the stock down more than 5% in the premarket? It looks like investors are taking recent dilution into account and taking profits. Here’s what’s happening:

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AYTU Stock Regains Compliance

For some time now, Aytu BioScience has been struggling with a key NASDAQ rule. The rule is that the stock must trade above $1 per share to maintain its listing on the index.

Due to recent news surrounding the company’s licensing of a COVID-19 rapid test and the subsequent approval fromt he FDA to commercialize, the stock has been on a tear upward. This has pushed the value of the stock to over $1 per share, putting an end to the minimum bid price issue.

The Fund Raise

On March 19, AYTU announced a fund raise:

AYTU raises funds.

According to the announcement, AYTU has raised $20 million through the sale of 12,539,187 shares of common stock and short term warrants. The common stock and warrants were sold at a price of $1.595 per unit.

While fund raises are generally concerning to the investing community, this one is likely creating a massive opportunity.

The Opportunity Ahead

Sure dilution is never a good thing. However, in this case, it is a necessary evil. Recently, Aytu BioScience announced that the FDA had granted it the ability to commercialize its coronavirus rapid test. In fact, by the end of the week 100,000 of these tests will have been shipped.

However, to commercialize a product, companies must spend massive amounts of money. Of course, the hope is that sales will cover these costs and then some. In the case of AYTU, the company simply didn’t have much money to cover the cost of commercialization. This $20 million fund raise changes all that.

Moreover, commercialization is likely to be highly successful. Let’s face it, COVID-19 is changing life as we know it. Our kids are not in school, our planned events have been shut down, we’re being told not to hold back yard events, and to stay in our homes.

The faster the coronavirus gets under control, the faster we can move on with our lives, and diagnostic testing is an important part of controlling a viral pandemic. With AYTU having the only rapid test available in the United States, demand is likely to skyrocket out of the gate, creating a tremendous boost in revenue and making this fund raise well worth while.

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1 thought on “Aytu BioScience (AYTU) Stock Falls After Regaining Compliance”

  1. This company and the CEO sound like a big scam…they have no product. they been talking about shipment coming this week for weeks. and here were are nothing. bunch of losers trying to steal people money in time of crisis. Josh Disbrow things comes around full circls.

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