One of the biggest movers in today’s market is little-known health tech company TRxADE Health (NASDAQ:MEDS). Shares of MEDS stock have rocketed more than 60% higher as of this writing on an otherwise uneventful day in the market.
This move follows an announcement from the company yesterday that TRxADE Health would undertake a 1-for-15 reverse stock split. This split went into effect before trading opened today, resulting in a stock price well above $1 per share. In fact, after today’s climb, MEDS stock trades around the $9 level.
Reverse stock splits are generally taken on by smaller-cap companies looking to maintain their listing requirements with a given exchange. In this case, the Nasdaq has a $1 threshold that firms need to maintain, necessitating this split.
However, the price action for a given stock following a split can be volatile in either direction. Let’s dive into why this particular stock is soaring today on the news.
Why Is MEDS Stock Soaring Today?
TRxADE Health is a rather interesting company in its own right. The firm provides IT services to companies looking to digitize their retail pharmacy experience. That can take the form of optimizing drug procurement and other digitization efforts related to simplifying and streamlining the prescription journey for customers.
For investors looking for exposure to healthcare tech stocks, there aren’t many options. And TRxADE Health is certainly a company that has flown under the radar, given its market capitalization of only about $90 million at the time of this writing.
Thus, it appears investors are cheering the reverse split, as it keeps this stock listed and provides potential exposure to a high-growth area of the market. In cases like this, it appears delisting fears were artificially depressing the stock. With those out of the way, investors can now look to what the company’s prospects are moving forward.
Of course, reverse splits are typically undertaken by companies that have seen their share prices get demolished. Companies that are heavily shorted, or see demand for their shares fall steeply, are inherently risky. Accordingly, investors should be cautious about this high-momentum move today.
That said, for investors seeking momentum movers in the small-cap world, MEDS stock is one to keep an eye on.
On the date of publication, Chris MacDonald 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.
