Some investors of HTG Molecular Diagnostics (NASDAQ:HTGM) got a big surprise today. Due to a reverse share split, HTGM stock is suddenly more expensive. Before you jump into the trade, however, it’s probably a good idea to learn the specifics of the stock split and how the shareholders are responding to it.
Based in Arizona, HTG Molecular Diagnostics is a very small life sciences company. Its market capitalization of around $88 million gives an indication of just how tiny HTG Molecular Diagnostics is.
Yet, a stock representing a small business can still make a big move. HTGM stock is higher in price than it was yesterday, but there’s a specific reason for that. HTG Molecular Diagnostics announced a 1-for-12 reverse stock split yesterday, and shares started trading on a split-adjusted basis this morning.
In other words, HTG Molecular Diagnostics investors will now have one share worth 12 times as much instead of 12 cheaper shares. So, the investors aren’t suddenly fabulously wealthy — but they are enjoying some price appreciation today.
What’s Happening with HTGM Stock?
On a split-adjusted basis, HTGM stock rallied 4% to 5% early in today’s trading session before fading somewhat. Thus, it appears that HTG Molecular Diagnostics investors are generally pleased with the reverse share split.
Also, here’s an important point to keep in mind. HTG Molecular Diagnostics shares trade on the Nasdaq exchange, and now they’re above $5. This is crucial because the Nasdaq exchange has been known to sometimes delist stocks when they stay below $1 for too long, and because sub-$5 stocks are sometimes called penny stocks.
HTGM stock is now far above $1 and firmly above $5, so those issues are resolved for the time being. This doesn’t necessarily mean shares will continue to stay above those levels, however.
If you choose to invest in HTG Molecular Diagnostics now, just understand that small-cap stocks can be quite volatile. Be ready for sizable share price moves, and possibly more reverse splits if shares fall in 2023 like they did in 2022.
On the date of publication, David Moadel 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.