Why Poet Technologies Stock Skyrocketed This Week
Key Points
Poet stock saw massive gains following the company's announcement of a deal with Lumilens.
Poet's Lumilens deal could be worth as much as $500 million.
The stock pulled back following the company's Q1 report and new financing announcements.
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Poet Technologies (NASDAQ: POET) stock recorded massive gains over the last week of trading. The photonics company's share price surged 45.8% higher over the stretch.
Poet stock roared higher this week following news that the company had inked a major new deal with Lumilens. While the optics technologies specialist's share price saw a pullback in conjunction with the publication of the company's first-quarter results and the announcement of a substantial new fundraising move, the stock still closed out the last week of trading with huge gains.
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Poet stock surged on news of the Lumilens deal
Poet published a press release on May 14 announcing that it had secured a contract with Lumilens. Through the deal, Poet will provide optical technologies to support Lumilens's artificial intelligence (AI) hardware. Lumilens has put in an initial order valued at roughly $50 million, and it has left the door open to order more than $500 million worth of hardware through Poet.
Along with the hardware purchase order, Poet granted Lumilens a warrant giving it the right to purchase roughly 22.9 million shares of common stock and the immediate right to purchase roughly 2.3 million shares of common stock. The warrant gives Lumilens the opportunity to exercise buying rights at a price of $8.25 per share over a nine-year period.
Poet saw huge gains this week even with a post-earnings pullback
Poet published its first-quarter results before the market opened on May 15. The company reported sales that beat the average Wall Street analyst estimate, but the business also recorded a wider-than-expected loss. Poet posted a loss of $0.08 per share on sales of approximately $0.5 million. For comparison, the average analyst estimate had targeted a per-share loss of $0.05 on sales of $0.25 million.
Along with its Q1 report, Poet announced that it had entered into an agreement to raise roughly $400 million through the sale of new stock and warrants. Through the deal, the purchaser will receive one common share and a warrant granting the right to purchase an additional common share at a combined price of $21. Even though investors are facing dilution with the new fundraising moves, Poet stock posted huge gains this week.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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