Bird (BRDS) Stock Rallies 18% After NYSE Delisting Warning

Advertisement

  • The New York Stock Exchange just issued a delisting warning for Bird Global (BRDS) stock.
  • BRDS stock absorbed this seemingly bad news, converting it into sizable upside.
  • Investors may still want to focus on Bird’s fundamentals rather than chase technical swings.
Bird Electric Ride Sharing Scooters Lined Up and Ready to Rent
Source: Arne Beruldsen / Shutterstock.com

Last Friday, Bird Global (NYSE:BRDS) announced that the New York Stock Exchange gave it a delisting warning over non-compliance issues. Despite the negative implications, though, BRDS stock shot up 18% early this morning before shedding some optimism. Heading into the afternoon, shares are up by about 4%.

At first, the enthusiasm for BRDS stock may seem odd. Per exchange standards, the NYSE requires listed securities to maintain a price per share of at least $1. Failure to uphold this standard over a consecutive 30-day period results in a delisting warning, which is exactly what just happened to Bird Global.

So, why did shares go up? At least part of the upside appears to be related to Bird’s incentive to remain on the exchange.

Why Is BRDS Stock Rising Higher?

Bird plans to notify the NYSE by July 5 about its intentions to cure the stock price deficiency. Because the exchange provides maximum investor visibility, the company has every incentive to remain listed. That means you can expect Bird to throw the kitchen sink at the issue. Essentially, BRDS stock is up because astute traders recognize that management is desperate — and that desperation could lead to actions that will drive up shares.

Another factor to consider here is that some investors may be anticipating a short squeeze. Look at what recently happened with Ebang (NASDAQ:EBON), for example. After a delisting warning from the Nasdaq, EBON stock rocketed on the anticipation of bullish traders seeking to strike fear in potentially overleveraged bears.

Chasing this thesis will be tricky for BRDS stock, however. Investors should note that, as of the end of May, its short percentage of float is 6.35%. The short ratio is 2.4 days to cover. Neither metric is extreme enough to warrant a comfortable contrarian trade.

What’s Next for Bird?

Looking forward, Bird’s micromobility angle could be lucrative. However, the company has historically printed deep net annual losses. Additionally, delisting is really meant to protect retail investors from poor businesses. While Bird’s first-quarter performance does offer some encouragement, management has a tough market to crack with significant obstacles ahead.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More:Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Josh Enomoto did not hold (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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/06/bird-brds-stock-rallies-18-percent-after-nyse-delisting-warning/.

©2024 InvestorPlace Media, LLC