Why are Novonix shares outperforming the ASX 200 today?

This battery materials company is strengthening its financial position.

| More on:
A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Novonix Ltd (ASX: NVX) shares are having a good session on Wednesday.

At one stage, the battery materials and technology company's shares were up as much as 4.5% to 69.5 cents.

They have since pulled back a touch but remain up over 2% to 68 cents at the time of writing.

This compares favourably to the ASX 200 index, which has just slipped into the red.

Why are Novonix shares outperforming?

Investors have been bidding the company's shares higher today after responding positively to an announcement this morning.

According to the release, the company has shored up its balance sheet by accepting significantly more applications for its share purchase plan (SPP) than expected.

As a reminder, Novonix's SPP was priced at 60 cents per new share, and eligible shareholders were given the opportunity to apply for up to $30,000 worth of shares.

Novonix revealed that it received valid applications from eligible shareholders for 68.6 million fully paid ordinary Novonix shares to raise a total of $41.2 million (before costs) under the SPP.

Management notes that this means that that SPP was heavily oversubscribed well in excess of the $5 million target that was initially announced by the company.

And while not all valid applications will be filled in full, it is getting pretty close to doing so.

It advised that given the strong support shown by eligible shareholders and in accordance with the terms of the SPP, Novonix has allowed a greater level of participation by eligible shareholders. It has increased the size of the offer by $27.3 million above its original target of $5 million,

This means that the SPP is pulling in a total amount of $32.3 million before costs. This gives its balance sheet a big boost ahead of some big spending.

Why is it raising funds?

Novonix advised that it will use the proceeds from the SPP to purchase, install, and commission additional equipment in its Riverside facility in Chattanooga, Tennessee.

This equipment will be used to support the further qualification of products for the company's contracts with Panasonic, Stellantis, and PowerCo.

Commenting on the SPP, Novonix's chairman Admiral Robert Natter, said:

We were pleased to provide all of our eligible shareholders with the opportunity to participate in this offer. We received strong interest in the offer, allowing us to increase its size to $32.3 million. We thank our shareholders for their ongoing support of NOVONIX and its future.

Novonix shares are up almost 5% over the past 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man clenches his fists in excitement as gold coins fall from the sky.
Broker Notes

These ASX 200 shares can rise 20% to 50%

Let's see which shares are being tipped to rocket from current levels.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors panicked when the latest inflation figures came out today.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Broker Notes

Why Guzman Y Gomez shares are a sell

Goldman Sachs has given its verdict on the burrito seller.

Read more »

A man pulls a shocked expression with mouth wide open as he holds up his laptop.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Mac Copper, Pro Medicus, Web Travel, and Yancoal shares are pushing higher today

These shares are having a good time on hump day. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Fisher & Paykel Healthcare, IPD, and Predictive Discovery shares are falling today

These shares are having a tough time on hump day. But why?

Read more »

Man looking at his grocery receipt, symbolising inflation.
Share Market News

How are ASX 200 investors responding to the latest Aussie inflation numbers?

The ASX 200 was up 0.2% today before the ABS reported the latest inflation figures.

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Broker Notes

Macquarie sees more upside in Telstra shares – What are they worth?

Telstra shares are up 34% over the past year, and Macquarie thinks there's more to come.

Read more »