Microcap stock Paranovus whipsaws after announcing plans for $195 million equity raise
After soaring more than 2,000%, the stock crashed back down to earth on Wednesday.
Paranovus Entertainment, a little-known Chinese microcap company that sells “TikTok-related e-commerce solutions,” went on a wild ride on Tuesday, then cratered when the market opened Wednesday.
The stock soared more than 2,000% during intraday trading yesterday, before closing just 8.45% above its previous closing price. Paranovus said on Tuesday that it plans to sell up to $195 million worth of new shares over time. That is a lot, considering the filing also noted that prior to the offering the company only had roughly 1.6 million shares outstanding.
It probably goes without saying, but shareholders don't usually like dilution, so the news that the company has plans to sell up to $195 million worth of shares — or about 189 million shares based on the last price traded on June 4 — does little to explain the wild price action seen yesterday.
Still, the ticker got plenty of attention, with more than $1.3 billion worth of shares trading hands on Tuesday, compared to just $76,229 a week earlier, according to data from Bloomberg.
While intraday sellers may have made a profit, the party appeared to have ended this morning: The stock opened about 28% lower on Wednesday shortly after market open.
All told, about 228 million shares changed hands yesterday... and another 28 million have already traded on Wednesday.
As for Paranovus, the company said it plans to use the money its raising for potential acquisitions and expand its current businesses. It has a history of choosing some pretty interesting ventures.
Paranovus currently has two main businesses: one that specializes in e-commerce via platforms like TikTok Shop and an AI company that has unsuccessfully attempted to launch several products, including one that creates “digital versions of people, including deceased loved ones.” Its previous businesses have ranged from “nutraceutical and dietary supplements” to an “automobile sale business.”
