Critical Metals Corporation (NASDAQ: CRML) experienced a significant 24-hour plunge of 5.56% on Thursday, closing at a lower price despite earlier announcing a $50 million private investment in public equity (PIPE) financing deal. The stock's downward movement came as a surprise to many investors, given the initial positive reaction to the funding news.

Early Thursday, Critical Metals revealed plans to raise $50 million through a PIPE transaction with an institutional investor. The company stated that the proceeds would be used to fund the development of its Tanbreez rare earth deposit in Greenland, which boasts an impressive 4.7 billion metric tons of resources. CEO Tony Sage emphasized that this financing "further strengthens our balance sheet and demonstrates continued investor confidence in Critical Metals Corp as we advance our strategic portfolio of critical mineral assets."

However, the market's enthusiasm quickly soured as trading progressed. The reversal might be attributed to concerns over potential share dilution, as the deal involves issuing approximately 1.47 million new ordinary shares and pre-funded warrants for an additional 1.56 million shares. Additionally, news emerged that European Lithium, a significant shareholder, sold 3.03 million Critical Metals Corp shares at $16.50 per share, potentially contributing to the downward pressure on the stock price. Investors appear to be reassessing the long-term impact of the PIPE deal and the implications of a major shareholder reducing its stake in the company.