If you stumbled upon this morning’s more-than-1,000% jump in the price of InspireMD (NYSEMKT:NSPR) stock on top of an even-bigger gain on Monday, allow us to unpack things for you. Today’s the day that NSPR stock begins trading on a 1-for-15 reverse split adjusted basis.
InspireMD is an Israeli medical device maker focused on carotid stent products designed to reduce strokes.
Typically, a company will enact a split to boost its stock price by decreasing the number of shares outstanding. Often it is done to prevent a stock from being delisted or to improve a company’s image and visibility. For example, the former was the case late last year for Heat Biologics (NASDAQ:HTBX), which did a 1:7 reverse split to keep shares of HTBX stock compliant with Nasdaq standards.
Earlier this month InspireMD’s stockholders authorized the board of directors to effect a reverse stock split at a ratio in the range of 1-for-10 to 1-for-20. They settled on the midpoint in a move that seems more about limiting the exercise of warrants and conversion of preferred stock than anything else. The action reduces the number of outstanding shares from 118 million to 7.9 million shares.
The board authorized that each outstanding warrant currently trading on the NYSE American under the symbol “NSPR.WS” is now only worth 1/26,250 of one share of NSPR common stock at an exercise price of $131,250.00 per full share of common stock, and each outstanding warrant currently trading on the NYSE American under the symbol “NSPR.WSB” can purchase the same fraction — 1/26,250 — of one share of common stock at an exercise price of $52,500.00 per full share of common stock.
The “however” in the new terms is that warrants may only be exercised for a whole number of shares of common stock.
NSPR Split Comes Ahead of Likely Move to Nasdaq
The massive split comes ahead of a move by InspireMD to the Nasdaq Capital Market, believing that a listing there will open NSPR stock to a broader range of investors.
“We believe that moving to the Nasdaq Capital Market is a strategically sound approach that places us in the company of our peers and allows for improved visibility in the market,” CEO Marvin Slosman said earlier this month in an announcement of the split.
No date has been announced for that move to Nasdaq trading. The switch is unlikely to surprise investors who follow Israel-domiciled companies trading in the U.S. Israeli listings on Nasdaq include 38 healthcare companies, 24 technology companies and seven capital goods companies, according to the Israel Ministry of Economy and Industry.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News, McKinsey & Co. and McDonald & Company Investments.