In last trading session, the stock price of SemiLEDs Corporation (NASDAQ:LEDS) declined more than 13% to close the trading session at $6.06. The decline came at a share volume of 713,042 compared to average share volume of 662,213.
Last week, in a matter of just three trading sessions, the shares of SemiLEDS gained more than 400%, and an equity investment seems to be the catalyst for this upmove on the charts. This is certainly some type of promotion. Volume is almost 300 times more than the 30-day average. The social media sites are buzzing with comments about the LEDS stock. And as it was expected, the stock has halted its upward journey and is set to take a U-turn on the chart for a number of reasons.
After the close on last Wednesday, SemiLEDs released an 8-K reporting an equity investment by Dr. Peter Chiou. As per the report, Dr. Chiou has agreed to buy 577,000 shares of company’s stock at $5 per share, which amounts to a total investment of $2.885 million. He has also accepted to offer SemiLEDs a convertible note worth $1.615 million at 0% interest. As per the closing price of $3.30 recorded last Wednesday, Dr. Chiou has offered more than 50% premium over existing market price.
It is much obvious that trying to purchase nearly 1 million shares would move the stock price, provided almost 2.9 million share float the company boasts after it went for 1-for-10 reverse split in this year. For the recent transaction, Chiou would be paying the amount in three installments. The first instalment of $1 million has been paid, the second installment will be done in August and the last installment is due in September 2016. SemiLEDs has mentioned in the 8-K report that there is no guarantee that the firm can successfully conclude the deal or if Dr. Chiou can meet the financing terms of the purchase deal.