Shares of T2 Biosystems (NASDAQ:TTOO) are cratering lower today. This comes after the in vitro diagnostics company announced that its board of directors approved a 1-for-100 reverse stock split. The reverse split is effective as of today. Shares of TTOO stock will begin trading on a reverse adjusted basis starting tomorrow morning, Oct. 13. Shareholders had previously approved the measure at T2’s annual meeting of stockholders held on Sept. 15.
T2 stated that the primary reason for the reverse split was to regain compliance with Nasdaq’s minimum price requirement. In order to regain compliance, TTOO stock must close at or above $1 for at least 10 consecutive business days, but generally no more than 20 consecutive business days.
TTOO Stock: T2 Biosystems Announces Reverse Stock Split
The reverse split means that shareholders owning 100 shares prior to the split will own one share following the split. Their equity ownership of the company will not change, as the price of TTOO will increase by a factor of 100 following the split. Shareholders entitled to receive fractional shares following the split will instead receive a cash payment from T2.
The stigma behind reverse splits is significantly affecting TTOO today. As explained by Investopedia, “Generally, a reverse stock split is not perceived positively by market participants. It indicates that the stock price has gone to the bottom and that the company management is attempting to inflate the prices artificially without any real business proposition.”
Meanwhile, T2 has confirmed that it will report its third-quarter earnings after the market close today. Wall Street analysts are forecasting revenue of $3 million, down by 29.29% year-over-year (YOY). Further, they expect a GAAP and adjusted earnings per share (EPS) loss of 4 cents.
For the fourth quarter, analysts expect $4 million of revenue, signaling a decline of 36.17% YOY, and a GAAP and adjusted EPS loss of 3 cents. T2 will likely remain unprofitable for several years, as analyst estimates available on Koyfin point to negative GAAP EPS all the way out into 2028, which is the year of the last available estimate. Adjusted EPS will likely remain negative until 2028 as well.
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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.
