Groupon (NASDAQ:GRPN) is in the news Thursday after GRPN stock took a massive dive following a reverse stock split.
The Groupon reverse stock split went into effect on Wednesday and was 1 for 20. The goal of the plan was to jump up the share price of the stock, which has been trading dangerously low since mid-February. GRPN isn’t in danger of Nasdaq delisting for low share prices, so at least it worked in that regard.
Groupon decided to go forward with the reverse stock split plan after consulting with investors at its annual shareholder meeting on Tuesday. Shareholders were in favor of the plan and the company’s Board of Directors gave it their approval the following day.
The Groupon news release notes that the reverse stock split affects all shareholders equally. This means it didn’t result in any changes to ownership in the company. The split also doesn’t allow for fractional shares. Instead, those shares are complied and resold, with shareholders getting cash payments for their fractions.
It’s worth pointing out that even after this reverse stock split, investors may not have much faith in GRPN stock. The company hasn’t been able to turn a profit for some time now and isn’t expected to until 2024 at the earliest. That’s quite a wait for shareholders to start seeing a return on their investment and may warn others away from the stock, reports The Motley Fool.
GRPN stock was down 26.2% as of Thursday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.