Why Contango (CTGO) Shares Are Getting Hammered

Contango ORE Inc CTGO shares are trading lower by 21% to $19.66 during Tuesday’s session after the company announced the pricing of its underwritten public offering of 731,750 units at $20.50 per unit, each comprising one share of common stock and one-half of a warrant, with whole warrants exercisable at $26.00 per share for 36 months.

The units will be sold together but issued separately. The offering aims to raise approximately $15 million in gross proceeds before expenses and is expected to close around June 12.

The net proceeds will be used for general corporate purposes, including working capital and exploration projects, particularly the Lucky Shot Project and the Johnson Tract, with the latter part of a pending acquisition set to close by July 2024.

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Should I Sell My CTGO Stock?

Whether to sell or hold a stock largely depends on an investor's strategy and risk tolerance. Swing traders may sell an outperforming stock to lock in a capital gain, while long-term investors might ride out the turbulence in anticipation of further share price growth.

Similarly, traders willing to minimize losses may sell a stock that falls a certain percentage, while long-term investors may see this as an opportunity to buy more shares at a discounted price.

Shares of Contango have lost 35.5% year to date. This compares to the average annual return of 10.44%, meaning the stock has underperformed its historical averages. Investors can compare a stock's movement to its historical performance to gauge whether this is a normal movement or a potential trading opportunity.

Investors may also consider market dynamics. The Relative Strength Index can be used to indicate whether a stock is overbought or oversold. Contango Ore stock currently has an RSI of 56.38, indicating neutral conditions.

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CTGO has a 52-week high of $32.50 and a 52-week low of $14.03.