Shares of Camber Energy (NYSEMKT:CEI) opened near $4, as the company’s 1-for-50 reverse stock split was officially enacted today. That means that shareholders who owned 50 shares share of CEI stock before the consolidation will now own 1 share after the consolidation. Fractional shares were not issued as part of the reverse split, and “fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share on a per shareholder basis.”
Meanwhile, there are now a total of 20 million authorized shares, down from 1 billion shares. Additionally, there are now a total of about 17.8 million outstanding shares, down from 887.7 million shares.
Camber’s board of directors approved the reverse stock split unilaterally without the approval of shareholders.
CEI Stock: Camber Enacts Reverse Stock Split
Camber’s board approved the measure solely due to a New York Stock Exchange American policy violation. Each company listed on the exchange must have a minimum bid price of 20 cents. A failure to keep up with the bid price could result in an automatic delisting.
Still, reverse stock splits can carry a negative connotation. They indicate that a company’s management seeks to artificially inflate the stock price due to low prices and/or significant declines. Liquidity may also decrease, as there are fewer shares outstanding. With fewer shares on the market, volatility can rise. On the other hand, a higher share price can attract investors who are less willing to invest in a penny stock. It may also attract more coverage from analysts who are hesitant to research lower-priced stocks.
Ultimately, there are both pros and cons to a reverse stock split. However, in this situation, it appears that Camber had no option but to enact it due to the threat of being delisted.
What’s Next For Camber Energy?
So, what’s next for the energy company? Camber announced on Oct. 31 that its majority-owned subsidiary, Viking Energy, had received a notice of allowance from the United States Patent and Trademark Office (USPTO) for its “Multi-Chamber Medical Waste Ozone-Based Treatment Systems and Methods” patent application. A notice of allowance signifies that the USPTO deems the application to be valid. Camber stated that it expects a patent for the application in the next few months.
Viking seeks to use its technology for waste treatment in facilities like hospitals, laboratories and prisons. The company noted that the global medical waste management market was valued at $21 billion in 2016 and is expected to grow at a compound annual growth rate (CAGR) of 5.4% until 2025.
On the date of publication, Eddie Pan 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.