Why Is Rise Education (REDU) Stock Up 400%?

  • Rise Education (REDU) stock is rocketing 400% higher today.
  • However, that's only due to an American Depositary Share (ADS) ratio change.
  • This acts similar to a reverse stock split.
REDU Stock - Why Is Rise Education (REDU) Stock Up 400%?

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Rise Education (NASDAQ:REDU) stock is seeing a massive 400% gain on Friday but it’s not the positive news that some traders might think it is.

Instead, that incredible surge in value comes alongside an ADS ratio change. This is incredibly similar to a reverse stock split in that the price of the share changes without an overall change in ownership.

The Rise Education ADS change today has it switching from a two shares per ADS ratio to a new 10 shares per ADS ratio. This makes it the same as if shares of REDU stock had went through a one-for-five reverse stock split.

Rise Education also notes that there will be no fractional shares issues as part of the ADS ration change. Any fractional shares will instead be sold by the company’s depository, JPMorgan Chase (NYSE:JPM), for cash-in-lieu proceeds, after fees, for ADS holders.

So while REDU stock is up 400% today, it’s not something traders should celebrate or bemoan. It just changes the price of the stock, which could be beneficial for the company to keep it above minimum trading requirements.

Investors seeking out more recent stock market news will want to keep reading!

We’ve got all the hottest stock market coverage that traders need to know about for Friday! A few examples include what has shares of PowerBridge Technologies (NASDAQ:PBTS) and DocuSign (NASDAQ:DOCU) stock moving, as well as this morning’s biggest pre-market stock movers. You can read that news at the links below!

More Friday Stock Market News

On the date of publication, William White 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.

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