Digital Ally (DGLY) Stock Rockets On Fund Raise News

Digital Ally DGLY Stock News

Digital Ally, Inc. (NASDAQ: DGLY) is flying in the market this morning, trading on gains of well over 30% in the premarket hours. The gains come after the company announced that it would be raising about $5 million in a public offering. Generally, these offerings lead to declines, but there’s good reason for the investor excitement today. Here’s what’s going on:

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DGLY Stock Gains On $5 Million Fund Raise

In the press Digital Allysaid that it will offer 2,325,581 shares of common stock for sale at a price of $2.15 per share. The company is expecting that before deducting underwriting discounts and other offering expenses, the gross proceeds of the offering will come to approximately $5 million.

Moreover, DGLY said that it has granted the underwriter a 45-day option to purchase up to an additional 213,953 shares of common stock to cover any over-allotments. Aegis Capital will serve as the sole book-running manager for the offering, which is expected to close on or about June 10, 2020.

As always, the deal is subject to customary closing conditions.

Why The Stock Is Rocketing

At first glance, the news doesn’t seem so positive. A dilutive offering will raise $5 million at a pretty steep discount. So, what’s the deal? Why the excitement? Well, it all has to do with what DGLY plans on using the money for.

The company said that the net proceeds of the offering will be used for general working purposes, product development, order fulfillment, and working capital. So, what’s so exciting about that?

At the moment, riots are continuing to break out across the country in the wake of the death of George Floyd, a black man, at the hands of four white police officers. One which kneeled on Floyd’s neck for nearly 9 minutes, the other three watched and did not step in.

Nonetheless, there’s quite a bit of speculation circling that’s great for Digital Ally. Essentially, the belief is that as police violence leads to protests, riots and more, there’s a desperate need for video to capture all interaction between police and civilians. As such, DGLY should see a tremendous spike in demand.

With that in mind, one key purpose for the fund raise is to fulfill orders according to the press release. So, the company is raising money at the perfect time as it prepares for a demand increase in the wake of the death of George Floyd.

All in all, this makes DGLY stock one that’s worth watching closely with demand and revenue likely seeing substantial increases ahead.

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