Phunware (NASDAQ:PHUN) stock is falling hard on Friday as investors in the software platform company react to news of a 1-for-50 reverse stock split.
Investors in PHUN stock will note that the company is undergoing this reverse stock split as a way to boost the price of its shares. It’s doing so in an effort to avoid delisting from the Nasdaq.
The problem with PHUN stock is its low trading price. Phunware shares closed out trading on Thursday at just 25 cents. That has it well below the $1 minimum bid price required to maintain a listing on the exchange.
Phunware notes that the reverse stock split will go into effect after markets close on Feb. 26. That will result in its shares trading on a split-adjusted basis when markets open on Feb. 27. Shares will still trade under the PHUN ticker but will use 71948P 209 as their new CUSIP number.
What This Means for PHUN Stock
The reverse stock split will see Phunware consolidate every 50 shares of PHUN into a single share. Doing so will increases Phunware’s share price without reducing its market capitalization. This will also result in it having approximately 8 million shares outstanding after the reverse split.
PHUN stock is down 22.5% as of Friday morning with more than 76 million shares traded. The company’s daily average trading volume is still above that at 117 million shares.
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
