On Tuesday, Citi downgraded UP Fintech Holding Ltd. (NASDAQ:TIGR) stock from Buy to Sell, adjusting the price target to $5.50 from the previous $5.00. The move came after UP Fintech announced a proposed follow-on public offering of 15 million American Depositary Shares (ADSs). The offering includes a 20-day option for underwriters to purchase up to an additional 2.25 million ADSs, which is approximately 15% of the total offering size.
The firm estimates that the net proceeds from the offering of 15 million ADSs will be around $112 million, or potentially $128 million if the underwriters exercise their option to purchase the additional shares in full. These figures are based on the closing price of $7.44 per ADS on October 21, 2024. This public offering marks the first round of equity raising for UP Fintech since June 2021.
According to Citi, the transaction is expected to increase UP Fintech's equity base by about 22% to 25%, using the first half of 2024's static financials as a reference. Moreover, the firm anticipates that this will result in a dilution of approximately 10% for the company's earnings per ADS for the fiscal year 2025 estimates.
The proceeds from the offering are intended to be used primarily to enhance UP Fintech's capital base and to fund further business development initiatives. The company's plan aims to reinforce its financial position and support its growth strategies moving forward.
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