In four turbulent weeks, NAGA Group has encountered a series of setbacks, like a stock slump, raising concerns among investors and employees. The company’s brief rally, spurred by rival Capex.com’s announcement of a Reverse Merger and capital injection in mid-December, has given way to a downward spiral.

Moreover, NAGA Group reported lackluster financial figures for 2023, failing to impress the market and leading to a sharp decline in its stock value. Adding to the turmoil, NAGA’s subsidiary, NAGA Markets Europe Ltd in Cyprus, faced a €150,000 fine from CySEC. The charges included an obligation to execute orders on terms most favorable to clients.

Also, shares of NAGA continued their descent, culminating in a 9% decline on January 12, with the stock closing at €0.79 and hitting a new 52-week (and multi-year) low. This marks a 29% drop from the post-merger announcement closing price of €1.12 on December 22.

NAGA Group Faces Stock Slump and Layoff Worries Amid Capex.com Merger

Moreover, insiders at NAGA Group reveal a growing unease among employees, with pending layoffs looming large. The Capex.com-NAGA merger aims to achieve up to $10 million in annual operating cost savings, primarily through reductions in regulatory overheads, headcount, technology, and costs of goods sold. The majority of these layoffs are going to come from the NAGA side, with Capex.com effectively taking the reins and Octavian Patrascu, Capex.com’s controlling shareholder, poised to become the new CEO of NAGA Group.

The share price decline appears linked to a reassessment of the combined companies’ post-merger value, a process expected to take several months pending regulatory approvals. The proposed deal involves NAGA issuing new shares to Capex.com shareholders, resulting in about three times the current outstanding shares. Consequently, Capex.com shareholders are set to control approximately 75% of the merged entity post-merger.

This substantial dilution is causing anxiety among NAGA shareholders, who now question whether the combined company, boasting an estimated annual revenue of $90 million over the last 12 months, justifies a valuation four times that of NAGA’s current market worth (approximately €47 million). As stakeholders await regulatory clearance, uncertainties persist, casting a shadow over the future of NAGA Group.

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