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Babylon Holdings Limited
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== Stock Price Timeline and Explanation == Having successfully completed series A, B and C funding, worth $25mn, $60mn and $550mn respectively, in the six years following its birth, Babylon was taken public in the final quarter of 2021. Babylon made the decision to divert from the traditional Investment Bank IPO route and instead chose to look in the direction of SPACs. '''Public listing (October 2020)''' <small>SPACs, or Special Purpose Acquisition Vehicles, are blank cheque companies that have no commercial operations. Formed by groups of investors, SPACs raise capital through an initial IPO which is then placed in an interest generating trust account. After the management team has identified a particular target company, it will merge with that company using the money in the trust. This allows the target company to become public without going through an Investment Bank or a traditional underwriter.</small> <small>During 2020 and 2021, there was a huge surge in the use of SPACs due to excessive liquidity that had arisen from the pandemics over-expansive monetary policy. A key player in the then exponentially growing telemedicine market, Babylon looked to capitalise on its position as soon it could. SPACs offer a significantly faster time to market than traditional routes which seemed most applicable for Babylon at the time. Ultimately, this decision lead to a sharp demise in investor confidence as the share price has dropped 99.99% since IPO.</small> Ahead of its stock market debut, Babylon was valued at $4.2bn, set to receive $575mn from the merger with the SPAC, Alkuri Global. Typically in SPACs, shareholders have the option to redeem their shares prior to the business combination, for a pro-rata share of the funds in the investment trust. Since the SPAC target company often hasn’t been identified when the SPAC is formed, this procedure incentivises investors who may be worried about risks involved. On the date of the merger, 90% of shareholders chose to redeem their shares despite having all voted to approve the deal. As a result, Babylon was left with just $275mn in cash, $300mn less than originally calculated. To make up for this shortfall, Babylon had to cut staff, cancel two existing NHS contracts early and raise $80mn in additional cash – a disaster. Shortly after going public, the share price of Babylon Holdings LTS, under the ticker BBLN, peaked at $272.50 with a market cap of over $3.5billion. On the day of writing, it sits at $0.0331 with a market cap just under $850k. '''Omicron Variant (November 2021)''' Adding to an already tough first month of being public, in November 2021 reports of the new Omicron COVID-19 variant spread around the globe. After a period of hope that the worst of pandemic was over, the stock market rally was stunted by reports of rekindled restrictions enforced to stop the spread of the new variant. A move that would again lead to economic slowdown, investor risk appetite fell due to the uncertainty in the near future. This lead to a large collapse in global equities, hitting Babylon as hard as anyone else. '''Reverse stock split (December 2022)''' In September 2022, Babylon received notice from the NYSE that it violated rules stating that listed companies must maintain an average closing price of at least $1 a day, over a 30 day consecutive closing period. In response, Babylon decided to issue a 1-for-25 reverse stock split that became effective on the morning of 16<sup>th</sup> December 2022. In this move, Babylon Holdings LTS Class A Ordinary Shares were reduced from approximately 620 million to approximately 24.8 million shares. By reducing the number of shares outstanding, it was hoped that this would increase the price per share and allow its continued listing on the NYSE. Despite this change, Babylon's stock price continued to slide in the following months. '''Announcement of planned delisting from stock exchange (May 2023''') '''Other factors influencing share price''' ''Changing consumer demands'' Babylon’s poor stock performance since its first listing in October 2021 can also be put down to the over inflated state of the telemedicine market at the time. During the pandemic, digitisation within the healthcare industry accelerated sharply, driven by the need to access patients who were forced into self-isolation. In a world where a return to pre-covid life seemed only imaginary, the telemedicine industry was in the forefront of investors’ minds, with Matt Hancock even describing Babylon’s services as “revolutionary”. However, as the world recovered from the pandemic, the rate of healthcare digitisation slowed as it became less of a pressing concern to many people. Having listed on the NYSE near the peak of this focus, investment into Babylon’s public equity only had room to fall as telemedicine expectations dropped to pre-covid levels. Additionally, the stock market started to peak in October 2021 before a long downward trend, driven first by the Omicron variant and then later an extremely volatile geopolitical climate, along with monetary and fiscal contraction in response to soaring inflation. ''Target market not reached''
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