Chesapeake Energy (NYSE:CHK) is seeing CHK stock take a beating on Wednesday despite a reverse stock split.
The Chesapeake reverse stock split was revealed by the company on Monday but only went into effect today. It has the company’s Board of Directors enacting a 1-for-200 reverse stock split. The move has the approval of CHK shareholders.
Chesapeake Energy notes that the reason behind the reverse stock split was to boost the value of CHK shares above $1. That allows it to continue trading on the New York Stock Exchange. The initial plan was for a 1-for-50 to 1-for-200 reverse split, with the Board choosing the 200 option.
The Chesapeake reverse stock split has the company reducing its total number of shares from 1.957 billion to 9.784 million. The action took place automatically and has shareholders automatically receiving the combined shares of the stock.
It’s worth pointing out that the company isn’t allowing fractions of shares to exist after the reverse stock split. Any investors that would own fractions of CHK shares are instead being reimbursed with cash.
The previous closing price for CHK stock prior to the reverse split was 13 cents. With the split taking place, the new closing price was $26.24. While that does keep the stock above the $1 threshold for NYSE listing, it’s already quickly losing value again.
CHK stock was down 36.05% as of Wednesday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.
