Akerna (NASDAQ:KERN), which provides software for the legal cannabis industry, rose over 30% overnight. Speculators believe it can execute a reverse split of KERN stock.
The stock is threatened with de-listing for failing to trade at $1 per share. The overnight run-up had it opening today at 19 cents with a market capitalization of $13 million.
Akerna tried to have a meeting on Aug. 30, but lacked the quorum to do business. The meeting was then adjourned and rescheduled for Sept. 20. If a quorum is achieved, the company will likely execute a reverse stock split.
What’s Going On?
Akerna is a global technology system for the legal cannabis industry. Its software is designed to comply with relevant laws. It now has eight units with total 2021 sales of more than $20 million. Unfortunately, more money is going out than is coming in. Losses in 2021 came to over $31 million.
The stock came public through a special purpose acquisition company (SPAC) called MTech that was founded in 2017. It hit a high of over $27 per share in 2019, during the height of the legal cannabis craze. It has been falling steadily since early 2021, when it was trading at $8. The high for 2022, achieved at the start of the year, was $1.81 per share. The average price target among two analysts is currently 15 cents.
Management sought to halt the slide with a corporate restructuring in May. This included a $690,000 hit to second quarter earnings to deal with 59 job cuts.
After the restructuring, the company had another stock offering, raising $10 million at 23 cents per share. The company is due to report third-quarter earnings on Nov. 6, with analysts expecting a loss of 6 cents per share, or about $5 million.
The stock has been actively traded lately. There are just 80.3 million shares outstanding, but about 25 million shares traded on Sept. 13.
What Happens Next for KERN Stock?
If Akerna can’t get a quorum for its Sept. 20 meeting, it may be delisted. If it does get a quorum, expect a reverse stock split. Speculators are betting it can make income meet outgo in the current quarter, or that it can find a buyer. But that’s all they’re doing: speculating.
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On the date of publication, Dana Blankenhorn 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.