Shares of PureCycle Technologies (PCT, Financial) surged 37.63% following the announcement of a significant cash infusion from investors.
PureCycle Technologies, which focuses on commercializing its polypropylene recycling technology, disclosed a $90 million raise from private equity partners Sylebra Capital Management and Samlyn Capital, LLC. The funding consists of $50 million in preferred stock and $40 million in an equity raise at $4.69 per share, which was the closing price on the previous day. Additionally, PureCycle issued 5 million warrants to these partners, convertible into stock at $11.50 per share, expiring on Dec. 1, 2030.
This development comes as the company nears commercialization and had only $11 million in cash at the end of the last quarter. Progress at PureCycle's Ironton, Ohio plant also contributed to investor enthusiasm. The plant processed 10,000 pounds in an hour and achieved two days of processing 200,000 pounds per day in September. The company aims to process 1 million pounds in September and plans to reach 3 million pounds per month in the fourth quarter. This period is also expected to mark the beginning of significant revenue generation.
Currently priced at $6.455, PureCycle Technologies (PCT, Financial) demonstrates a moderate market cap of $1.06 billion. While the stock's price-to-book (PB) ratio stands at a reasonable 3.65, it lacks a price-to-earnings (PE) ratio due to negative earnings-per-share (EPS) of -$0.93. One concerning metric is the company's negative cash flow, with a free cash flow yield of -17.7%. The GF Score for PureCycle, reflecting various performance indicators, is 38, which is on the lower end of the spectrum. This score is derived from low profitability and financial strength grades of 'F' and 'C', respectively.
Despite the recent surge, PCT remains a high-risk investment. Its Piotroski F-Score is a low 1, indicating poor operational efficiency. Moreover, PureCycle's debt-to-equity ratio stands at 1.17, suggesting a significant leverage risk. However, with institutional ownership at 70.48%, it indicates that the stock is still trusted by large investors to some extent.
Given the current financial metrics and GF Value, investors should proceed with caution. Interested investors can check the detailed valuation metrics on the GF Value page for PureCycle Technologies (PCT, Financial).
