The bull case and when a raise makes sense

Yesterday DSE took a big hit to its share price.

The impending capital raise and off market purchase vote might be the reason for this.

For a moment let's assume that the vote does not get the required 75% needed for the change in the constitution.

Where would that leave the business?

As per the last filing the business should have more than $2million in cash and set to be profitable and cashflow positive this next quarter given its current trajectory. Why would it need a big cash injection then?

I believe the answer lies in further development, in particular the little spoken insights product that requires AI which is expensive to develop. AI development could mine the vast troves of data (email in particular) on behalf of its customers and thereby creating a potentia mega .

That being said management has not stated how the next raise would be used. Also it would make far more sense to do a fund raising once the business has had 1 or 2 quarters of positive cashflow which would draw institutional capital as well as rerate the stock and potentially get DSE included into a few index markets.

The future is bright but it would be good for management to maybe explain where the new cash was being invested and also why they are choosing this timing to do cash raising Vs a bit down the track when they have won the hearts and minds of bigger capital.