- Penny stock ShiftPixy (NASDAQ:PIXY) is seeing an impressive surge today
- The company is up 185% after announcing a new share distribution plan
- Despite this news, PIXY’s gains are likely to stabilize before markets close
Staffing software producer ShiftPixy (NASDAQ:PIXY) is enjoying a day of significant growth. As of this writing, PIXY stock is up 185% after the company announced a special share distribution for stockholders.
Today’s news also involves Industrial Human Capital (NYSE:AXH), a special purpose acquisition company (SPAC). ShiftPixy has a roughly 15% ownership stake in the blank-check firm. But while PIXY stock is skyrocketing today, AXH is falling quickly.
Let’s take a closer look at what’s going on.
A New Deal for PIXY Stock
Today, ShiftPixy announced that its board of directors had approved a special share distribution initiative for PIXY shareholders. A statement released by the company lays out the following: “All ShiftPixy shareholders of record as of May 17, 2022, will receive their pro rata share of AXH common stock equal in proportion to their percentage holdings of ShiftPixy common stock issued and outstanding.”
The statement goes on, “the exact number of shares of AXH common stock to be received by ShiftPixy shareholders for each share of ShiftPixy common stock will be determined immediately before the record date based on the number of shares of ShiftPixy common stock outstanding on an as-converted and as-exercised basis.”
In sum, all investors who hold PIXY as of next week will receive the same percentage of AXH stock. While there is currently no set distribution date, ShiftPixy notes that it will happen following the initial business combination of AXH. No fractional shares will be issued as part of the initiative and “no distributions will be made in lieu of fractional shares.”
While the special share distribution’s approval is good news for PIXY stock investors, it is not a complete deal. The company notes there is no guarantee of AXH’s initial business combination. If it does not conclude successfully, SwiftPixy will stop operations with AXH, rendering AXH stock worthless.
What It Means
As much as PIXY stock has surged today, its gains are about to stabilize. A microcap stock that hasn’t traded at more than $1 per share since February 2022, PIXY has little to excite investors in the long-term. It rose early in 2022 on high short interest, but those flash-in-the-pan catalysts don’t keep a stock up for long. PIXY failed to garner meme-stock status when it had some investor’s attention. As a result, it quickly fell and hasn’t seen real growth since. Even SwiftPixy’s venture into the non-fungible token (NFT) space failed to push it up while NFT interest was skyrocketing.
Today is an example of another superficial catalyst that won’t generate any sustainable growth for PIXY stock. While it’s impossible not to be excited when a stock surges 180% in a few hours, investors must carefully assess the bigger picture. Penny stocks often rise on quick announcements that spike social media attention. When interest passes, shares fall as quickly as they rose. The case of PIXY stock’s surge today won’t be any different.
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On the date of publication, Samuel O’Brient 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.