A lot of things sell on a subscription basis these days. Hand-cut soap, vitamins, and a host of other things arrive routinely at one’s door for a monthly fee. But Glory Star New Media Group Holdings (NASDAQ:GSMG) may have put the lot to shame as it set up a Share Subscription Agreement with two different institutional investors. The move was sufficient to send shares blasting up over 133% at one point in Tuesday’s trading, though the stock ultimately gave back all but about 45% of that gain as the day went on.
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Glory Star offered up the subscription agreement to two different investors, who weren’t named. But the duo gets access to a total of 24,193,548 ordinary shares at a cost of $2.48 per share. Given that shares hit a 52-week low of $0.42 back on Friday, that represents a very substantial premium. Overall, Glory Star expects to land $60 million total from the transaction.
How did Glory Star arrive at that $2.48 price? The purchase price was reached by combining two factors: one, a privatization share price of $1.55, as approved by shareholders back in November 2022. Then, an additional 60% premium was agreed to by not only Glory Star but also its investors. Glory Star, a combination of digital media platforms and e-commerce companies focusing on content in China, looks for the deal to be complete in late May.
A look at the last five days in trading for Glory Star stock shows a stock that held a pretty tight line around that 52-week low price, generally trading between $0.45 and $0.49. However, Tuesday’s news about the subscription agreement sent shares blasting up. Despite the impressive run-up, though, shares today didn’t breach the 52-week high of $1.54.