Whenever a company receives a deficiency notice from an exchange, investors can typically expect the stock to fall precipitously. But that’s not the case with Momentus (NASDAQ:MNTS) today. In fact, MNTS stock is moving higher on such an announcement.
Currently, MNTS stock is up around 35% in afternoon trading. This move comes on news that the company revealed in an 8-K filing that it received a deficiency letter from the Nasdaq. The letter notified the company that it is not in compliance with listing rules.
With shares trading at around 50 cents apiece (after today’s rise), the $1 minimum share price required for listing on the Nasdaq currently remains unmet. This could lead the company to potentially pursue a reverse split, or other measures, to ensure that MNTS stock stays listed.
Here’s what to make of the wonky price action with Momentus today.
MNTS Stock Climbs Despite Nasdaq Notice
Momentus’ impressive move higher today really makes no sense. On this news, investors can expect some sort of reverse split, or other action, on the horizon in order for the company to maintain its listing. Such moves are typically negative for a stock, with a declining share price usually indicative of a company falling on hard times.
Momentus noted in its filing that “The Notice has no immediate impact on the listing of the Company’s common stock on Nasdaq, and the Company’s listing remains fully effective.” While true, it’s also likely that we will see some financial engineering to ensure MNTS stock continues to be listed and that Momentus can benefit from access to public markets moving forward.
Speculative fervor around this small-cap stock appears to be what’s driving today’s move. With a market capitalization of only $6 million and a microscopic share price, penny stock investors are clearly betting on some sort of potential squeeze on the horizon.
Certainly, short interest is likely to remain high around a stock like this. However, betting on such a move would be a high-risk bet — and not one most investors should consider making right now, in my view.
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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.
