Unfortunately, the proposed reverse stock split only changes the price — not the value — of the shares. Over the past two weeks, GMXR shares fell by one-third, closing Friday at 50 cents a share. On Thursday, the shares hit an all-time low of 45 cents.
The company has scheduled a special shareholders meeting to consider a reverse stock split ranging from 1-for-5 to 1-for-13. A 1-for-5 split, for instance, would boost the current price of the shares to $2.50. But the underlying value of those combined shares would not be affected.
The company in a regulatory filing noted that artificially boosting the share price will help it regain a level needed to maintain its listing on the New York Stock Exchange.
GMX also hopes a higher price will boost investor confidence. “Lower-priced stocks have a perception in the investment community as being risky and speculative,” the company said.
Eagle & Beagle is a weekly look at the state's high-performing (eagle) and low-performing (beagle) by Business Writer Don Mecoy.