Nabriva Therapeutics (NASDAQ:NBRV) stock is catching the attention of traders on Friday after shares surged in price this morning. However, not all is as it seems.
Shares of NBRV stock rocketed more than 2,000%. But that was only due to the company undergoing a 1-for-25 reverse stock split. This saw the company consolidate every 25 shares of NBRV stock into one share.
When reverse splits happen, it doesn’t affect the total stake an investor holds. Instead, only the total number of outstanding shares is reduced. In this case, outstanding shares dropped from 69.7 million to about 2.8 million.
NBRV Stock Avoids Delisting
Companies choose to enact reverse stock splits for several reasons. That includes boosting the price of shares to meet minimum listing requirements. This is the case for NBRV stock, as it previously was below the $1 minimum needed to remain on the Nasdaq.
With the reverse stock split, the biopharmaceutical avoided delisting by boosting its share price from around 18 cents to the mid-$4 range. This follows up on a shareholder vote back in August that gave the board permission to move forward with a reverse split.
Today’s split has NBRV stock experiencing heavy trading. As of this writing, over 1 million shares have changed hands. That’s well above the daily average trading volume of about 100,000 shares.
NBRV stock is down 35% as of Friday morning.
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On the date of publication, William White 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.