Online used-vehicle retailer Shift Technologies Inc. on Wednesday executed a reverse stock split, meaning it consolidated its number of outstanding shares of common stock in the market to raise its share price.
The reverse stock split is "primarily intended" to bring Shift into compliance with the Nasdaq stock exchange's minimum bid price requirement of $1, the company said in a Tuesday news release. Shift's reverse stock split has a 1-for-10 ratio, which means stockholders receive one higher-priced share for every 10 shares they own. A reverse stock split itself does not change the company's overall market valuation, though investors sometimes view them as negative because they can signal a company's shares have declined in value.
Shift, which trades under the ticker SFT, received a delisting warning from Nasdaq in October after its share price fell below $1 and stayed there. To regain compliance, Shift's closing price has to be at least $1 per share for 10 consecutive business days by April 3, the company said in the news release.
Shares in Shift Technologies fell 16 percent to $0.17 at the Tuesday market close. Shares began trading on a split-adjusted basis Wednesday morning, falling another 13 percent to close at $1.53 on Wednesday.
At a Dec. 7 meeting, Shift's stockholders approved a proposal to authorize a reverse stock split and the company's board of directors approved the 1-for-10 ratio, according to the news release.
