Yesterday marked the first day of trading for Australian Wealth Advisors Group Limited (WAG) on the ASX, following its initial public offering (IPO). The stock closed at $0.350, representing a 40.000% increase from the offer price of $0.20 per share. However, despite the initial price increase, trading volume remained relatively low, with only 414,234 shares changing hands.

Limited range, Super Low Vol

The bid/offer range for WAG shares was observed between $0.315 and $0.350. This limited range suggests that there was not significant movement in the share price throughout the trading day. Low volatility and low volume.

A key aspect to note is the structure of WAG’s share capital. With 71,000,000 shares on issue at the prospectus date, the completion of the capital reduction resulted in 36,560,000 shares. An additional 25,000,000 shares were issued under the capital raising offer, bringing the total shares on issue to 61,560,000.

Furthermore, the existence of performance rights, consultant options, director options, lead manager options, and CEO options, totaling 37,940,000 other securities, adds complexity to the company’s share structure. When considering fully diluted share capital upon completion of the offers, the figure reaches 99,500,000 shares, indicating potential dilution for existing shareholders.

Significant Dilution

The indicative market capitalization upon completion of the offers (undiluted) stands at $12,312,000. However, the presence of significant dilution factors should be taken into account when evaluating the company’s valuation.

Caution Advised

Despite the initial price increase on the first day of trading, the relatively low trading volume and the complexity of WAG’s share structure raise doubts about the future price strength of the stock. Investors may approach with caution, considering the potential impact of dilution on shareholder value and the need for sustained trading activity to support price stability and growth.