NIS Stock Loses 23% of its Value in Two Days - NewsThomas Froehlicher , posted on 21 May 2019 / 1,290 Views
After Nippon Ichi Software announced last Friday that it would issue new debt via warrants, the company's stock price caught the attention of observers. Japanese news site IT media was quick to react and reported a 17% drop on Monday, mentioning stock dilution as the main reason.
Today's chart reveals that Nippon Ichi Software's stock kept falling on Tuesday, losing about 7% when the Tokyo Stock Exchange closed. The share is now worth 1215 yen, but here's the problem: the bottom exercise price of the warrants to be issued by NIS is 920 yen. If the share price drops under 920 yens, the warrant bears no intrinsic value. In such a case, anyone who acquires the warrant would lose money.
Of course, that doesn't mean the stock price can't or won't recover later. IT media also confirmed that NIS had 2 billion yen in cash and equivalents on its balance sheet, dated March 30th. The severe drop in the stock exchange is a serious alert but again we have yet to see actual evidence that the company is in immediate danger.