zSpace shares fall 10.81% intraday amid dilutive $3M convertible preferred stock financing and ongoing financial challenges.

zSpace (NASDAQ: ZSPC) fell 10.8% intraday following the announcement of a $3 million strategic investment from Planet One Education, which, while intended to strengthen its balance sheet and fund international expansion, was interpreted by the market as a sign of financial distress. The investment, structured as convertible preferred shares and warrants, comes amid a 38% year-over-year revenue decline in Q3 2025, a current ratio of 0.68, and Nasdaq compliance warnings. Analysts noted the investment price ($2/share for preferred stock) far exceeded zSpace’s trading price (~$0.47), highlighting potential dilution risks for existing shareholders. Additionally, the company’s reliance on external funding to address liquidity challenges and its recent restructuring efforts—including workforce reductions—may have dampened investor confidence, leading to the intraday selloff despite the partnership’s long-term growth ambitions.