SPECIAL REPORT The Top 7 Stocks for 2024

AYRO Stock Alert: EV Maker Ayro Plunges on Reverse Stock Split


  • Shares of Ayro (AYRO) stock are plunging on Monday.
  • This follows an announced 1-for-8 reverse stock split on Friday.
  • Investors also appear to be concerned about the company’s production speed.
a charging station for an electric vehicle (EV)
Source: Shutterstock

One of the leading decliners in today’s market, Ayro (NASDAQ:AYRO) stock is now trading at levels below where it started the year. Indeed, what looked like a promising year for investors in Ayro has turned sour, with AYRO stock losing more than half its value since its July peak this year.

This decline appears to be due in part to two key factors. First, the company announced a 1-for-8 reverse stock split on Friday in a bid to maintain its Nasdaq listing. This reverse split appears to be the key driver of today’s move, with investors taking the news as a clear negative signal.

Secondly, Ayro also announced last week that the company has entered “low-rate initial production” of its Vanish vehicle. This limited manufacturing run appears to have underwhelmed investors.

Let’s dive into what investors should make of this drop in AYRO stock today.

AYRO Stock Sinks on Reverse Stock Split

In general, reverse stock splits are a negative catalyst for most companies. These reverse splits are taken on in order for companies to maintain their listings. Without a public listing, small-cap and early-stage companies lose access to the public markets for financing. For many companies, that can be a death knell. Additionally, other concerns — such as a lack of liquidity for insiders and the inability to offer stock-based compensation — drive most reverse split decisions for companies like Ayro.

Today’s move indicates that the market isn’t necessarily jazzed about the position Ayro finds itself in. A niche producer of unique utility low-speed electric vehicles (EVs), the firm saw significant interest during the pandemic-driven EV boom. However, last year’s dramatic decline and this year’s continuation of that move haven’t spurred many investors to dive into this seemingly cheap stock.

That’s partly because the cost of capital (via debt and equity markets) has risen substantially, along with the Federal Reserve’s overnight rate. For now, Ayro has maintained its listing. But if it can’t provide a road map to profitability soon, AYRO stock could meet the fate of many other small-cap EV players in short order. At least, that’s what the market appears to be saying today.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More:Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Chris MacDonald 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.

Article printed from InvestorPlace Media, https://investorplace.com/2023/09/ayro-stock-alert-ev-maker-ayro-plunges-on-reverse-stock-split/.

©2024 InvestorPlace Media, LLC