Tiny marketing firm Creative Realities (NASDAQ:CREX) stock is up nearly 80% in morning trading today after announcing a merger in the advertising and signage world.
After markets closed on Friday, Creative Realities announced that it is merging with privately held Reflect Systems, a Richardson, Texas-based company that specializes in signage. Once the merger is completed, the new company will continue to operate as Creative Realities and continue to trade on the Nasdaq stock exchange.
Financial details of the merger weren’t disclosed, but the deal expands Louisville, Kentucky-based Creative Realities into new markets and should propel the company’s future growth higher.
What Happened With CREX Stock
The merger is a significant event in the U.S. marketing world. Creative Realities designs, develops and deploys marketing solutions, including advertising, websites and signage. It works with companies operating in the automotive, apparel, convenience store, gaming and stadium sectors across the U.S. and 10 other countries.
Reflect Systems is focused on digital signage platforms for companies operating primarily in the southern U.S. and its offerings to clients include strategy, creative services, content management, as well as media sales. With the merger of Reflect Systems, Creative Realities also gets access to that company’s proprietary ReflectView and AdLogic software platforms that are used to target marketing more effectively.
Why It Matters
The merger has provided a big boost to CREX shares, which currently trade at just $2.62. As of last Friday’s close, Creative Realities stock was down 6% year to date. Shares have been volatile, with CREX stock as high as $3.26 in mid-February. However, the share price has been slumping since July.
News of the merger with Reflect Systems has provided a much needed spark for CREX stock. However, even after today’s big jump, the shares will still be firmly in penny stock territory, defined as being valued at less than $5 per share.
Going forward, the volatility in Creative Realities’ share price is likely to continue and it is not clear yet how much the acquisition will benefit the company’s finances.
What’s Next for Creative Realities?
Anyone who held CREX stock before this morning is in for a good day. However, shareholders may want to take advantage of today’s pop and sell some stock as it is not clear how long the current rally will last. Monitor the situation closely today and keep your finger near the “sell” button to lock in gains.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.