How will the dilution from issuing 60 million shares at $0.15 affect earnings per share and valuation metrics?
The 60 million‑share registered direct offering will increase the capital base by roughly $9 million and, more importantly for valuation, add a sizable block to the float. Assuming NXTT’s current share count is around 80 million (the most recent filings list roughly 78‑80 M shares outstanding), the new issuance raises total shares to roughly 140 million – a ≈ 45‑50 % dilution. All else equal, earnings per share will fall by the same proportion: if the company earned $5 million in the trailing twelve months, the pre‑offering EPS of $0.0625 ($5 M ÷ 80 M) would be cut to about $0.036 ($5 M ÷ 140 M). Consequently, the price‑to‑earnings multiple will look more attractive only because the denominator (share price) is likely to be pressured downward by the influx of cheap capital; the P/E could rise from, say, 3× to 5–6× even though the same earnings now sit on a larger share count.
From a valuation standpoint, analysts will need to re‑baseline EV/EBITDA, price‑to‑book and market‑cap calculations on the higher share count. The $0.15 pricing is well below the current market level (NASDAQ: NXTT has traded in the $0.30‑$0.45 range over the past month), so the immediate dilutive impact on price is modest—the market will likely discount the stock by roughly the price differential (≈ 30‑35 % of the offering price) multiplied by the new share proportion, translating into a ~3‑5 % short‑term price pull‑back once the shares settle. The longer‑term effect hinges on how the $9 M is deployed: if it funds product development, expands the AI‑driven data platform, or reduces debt, earnings could rise and offset the dilution, potentially restoring the pre‑offering valuation multiples.
Trading takeaway: Expect a modest, near‑term dip (2‑4 %) as the market absorbs the new shares; keep an eye on volume spikes around the settlement date. If the company outlines a clear use‑of‑proceeds catalyst (e.g., a partnership or product launch) within the next earnings release, consider buying on the dip with a target of the pre‑offering valuation range, while watching EPS guidance for any signs that the capital infusion is translating into higher profitability. Conversely, if no clear growth narrative emerges, the diluted EPS and weaker multiples could keep the stock under pressure, making a short‑or‑protective‑put strategy viable.