It hasn’t been a good day for ContextLogic (NASDAQ:WISH). Earlier today, the e-commerce platform announced that it would be effectuating a 1-for-30 reverse stock split. As a result, shares of WISH stock plunged downward, closing the day down more than 21%.
This decline comes on the heels of a highly volatile month that has left WISH stock deep in the red and with no prospects for improving. This isn’t the first time the company has reported bad news this year, either. In February, shares dropped 19% after ContextLogic reported discouraging fourth-quarter results.
Here’s what else investors should know about the company’s troubling plunge today.
WISH Stock and the Reverse Split
A company typically opts for a reverse stock split when it’s in distress. Given ContextLogic’s poor Q4 earnings and pattern of decline, it’s not hard to see why it would opt for such a desperate measure. However, in doing so, ContextLogic may have signaled to investors that it’s in even worse shape than had been previously assumed.
Per a statement released by the company:
“The reverse stock split is intended to enable the Company to regain compliance with the minimum bid price requirement for continued listing on The Nasdaq Global Select Market. The reverse stock split was previously approved by Wish stockholders at the Annual Meeting of Stockholders held on April 10, 2023, with the final ratio determined by the Company’s Board of Directors.”
Wanting to remain on the Nasdaq makes sense. However, it’s also understandable why many investors would want to steer clear of a company teetering on the brink of delisting.
Looking forward, WISH stock doesn’t seem like it will demonstrate any actual growth, even if it does bounce back from today’s crash. At this point, shares belong on a list of penny stocks to sell. All told, ContextLogic has given investors plenty of reason to bet against it.
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On the date of publication, Samuel O’Brient 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.
