Why is Allarity Therapeutics (ALLR) stock down 23% today?
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Allarity Therapeutics (NASDAQ:ALLR) the stock fell on Friday after the announcement of a reverse stock split.
According to a press release, the company plans to implement a 1 for 35 stock split. This split will become effective today shortly after the market closes. This will see the shares trade on an adjusted post-split basis when markets open on Monday.
Allarity Therapeutics notes that its shares will continue to trade under the ticker symbol ALLR after the reverse split. He also mentions that the new CUSIP number for his shares will be “016744203”.
Why is ALLR stock getting a reverse split?
Allarity Therapeutics conducts a stock split to increase the price of its shares. The company is doing this to regain compliance with the Nasdaq Exchange’s $1 minimum listing rule. Shares of ALLR closed Thursday at $0.113.
ALLR shareholders approved the reverse split at a special meeting of shareholders on March 20. This allowed the company’s board to adopt a split at a ratio between 1:20 and 1:35.
Although a stock split does not change a company’s market capitalization, it does sometimes hurt a stock. Reverse stock splits don’t always inspire confidence in traders, which can lead to declines as ALLR is seeing today.
ALLR stock is down 23.3% on Friday morning.
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As of the date of publication, William White had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.