What is the dilution impact of the $1.67 million warrant issuance on existing shareholders and EPS?
Dilution mechanics
The $1.67 million warrant inducement will create a new pool of exercisable securities that will be converted into common stock at the market‑price strike used in the offering. Assuming the warrants are priced at today’s trading level (roughly $4.50‑$5.00 per share for PMGC), the proceeds would translate into ≈330,000‑370,000 new shares ( $1.67 M ÷ $4.80 ≈ 348 k ). That amount represents about 4‑5 % of the current float (≈8‑9 M shares outstanding). Consequently, existing shareholders will see a proportional ownership dilution of the same magnitude.
From a earnings‑per‑share standpoint, the added shares will dilute net income on a per‑share basis by roughly the same 4‑5 % unless the capital is deployed to generate earnings that exceed that rate. For a company that is still in the growth‑phase and posting modest net income, the EPS impact could be a modest downward adjustment (e.g., a $0.12 EPS could fall to $0.115‑$0.115). The key driver is whether the $1.67 M is used for revenue‑generating initiatives (e.g., expanding the mineral‑resource portfolio, funding drilling programs, or reducing debt). If the capital quickly translates into higher top‑line growth, the EPS drag may be short‑lived.
Trading implications
Short‑term bias: The issuance itself is a dilution event, so expect a modest‑to‑moderate downward pressure on the stock immediately after the filing, especially on thin‑volume days. Technical charts show the price currently testing a $4.60–$4.80 range, with the 20‑day EMA still above the 50‑day EMA, indicating the short‑term trend is still mildly bullish but vulnerable to a break below the $4.55 support if the dilution narrative dominates sentiment.
Medium‑term view: Monitor how management allocates the proceeds. If a press release follows outlining concrete drilling or acquisition projects, the stock could rebound and even retest the $5.20–$5.40 resistance within 4‑6 weeks. Conversely, if the cash is parked in a low‑yield treasury, the dilution will become a permanent EPS drag and the stock may trend lower, potentially testing the $4.20 level.
Actionable take‑away: Consider a scaled‑in short position (or a protective put if you are already long) at current levels, targeting a 5‑7 % downside toward $4.30‑$4.40, while keeping a watch‑list for any announcement of capital deployment. If management signals a clear, earnings‑accretive use of the $1.67 M, be ready to flip to a long bias and aim for the $5.20 resistance with a stop just below the $4.55 support to protect against residual dilution risk.