When shares of your stock drop over 57% in one day, it’s safe to say that you’re having a bad day and you might as well go back to bed. That’s what happened to healthcare stock Novo Integrated Sciences (NASDAQ:NVOS) today as shares plunged after word about a reverse stock split emerged.
A reverse stock split may not sound like great news, and as far as a lot of investors were concerned, it wasn’t. It’s made worse by the fact that this was a one-for-10 stock split. Novo officials noted that the reverse stock split was necessary in order to bring it into compliance with Nasdaq’s minimum bid rule, which requires a stock listed on the Nasdaq be worth at least $1 per share. If the stock should fall below $1 for 30 consecutive days, the Nasdaq will issue a deficiency notice requiring correction accordingly. This move will help protect against that step, even if it does cause losses to begin with.
The change will start at the close of trading on November 6, which is today, so split-adjusted trading will start up with November 7th’s trading. Reports note that the board of directors okayed the split back on September 29, during the annual meeting, and noted that the ratio was specifically chosen in a bid to attract more investors in both the retail and institutional markets. Still, the news likely came as a shock given that, just days ago, Novo’s board authorized $5 million for stock repurchasing.
What is the Future of NVOS Stock?
Turning to Wall Street, a look at the last five days in trading for NVOS stock shows what would have been fairly decent results, until today hit. A slight dip in the early part of the five-day window was followed by a fairly substantial rise, which held for a little while before staging a catastrophic drop with today’s trading.
