Markforged Holding Corp (NYSE:MKFG), a computer equipment company, announced a 1-for-10 reverse stock split of its common stock, beginning in early trading on Thursday. This move is accompanied by a reduction in authorized shares of common stock from 1 billion to 100 million.
The reverse stock split was approved at the annual meeting of shareholders on June 18, 2024, and the board of directors approved the move on August 13, 2024. Implementation began at 12:01 a.m. Eastern time on the day of the announcement, with the stock trading under the new number of CUSIP but retaining its existing ticker symbol.
As a result of the reverse split, every ten shares of Markforged common stock automatically converted into one share. This adjustment reduced the number of shares outstanding from approximately 203 million to approximately 20.3 million.
The company confirmed that no fractional shares are issued; shareholders who would have received a fraction of a share instead receive an additional portion to reach a whole share.
The reverse split also required a limited adjustment to Markforged's equity compensation plans, including the exercise value and share price available for the exercise or conversion of outstanding stock options, restricted stock units, and other equity securities. The warrants are adjusted in the same manner, with every ten warrants previously exercisable for one share of common stock now exercisable for one share at a revised exercise price of $115.00 per share.
The Continental Stock Transfer & Trust Company handles the exchange process with reverse splits. Shareholders whose shares are in book-entry form will receive a transaction statement showing their post-split ownership and need not take action.
Those who hold shares through banks, brokers, or other nominees will see their holdings automatically adjusted to reflect the reverse split, depending on the policies of the holding companies.
In other recent news, Markforged Holding Corporation announced a 1 to 10 stock split to meet the minimum bid price of the New York Stock Exchange.
This decision, approved by the Board of Directors, will reduce the number of shares outstanding from approximately 203 million to approximately 20.3 million.
The move follows a drop in the company's Q2 2024 revenue from $25.4 million to $21.7 million year over year, despite a 51.9% improvement in net income.
The company also unveiled a $25 million cost-cutting plan, mostly targeting R&D costs. Markforged was able to ship its first PX100 and accelerate shipments of its FX10 product, with plans for further expansion in the second half of the year. However, potential legal challenges from Continuous Composites could result in a 5 to 7 percentage point decline in gross margins. Despite these challenges, Markforged projects receive between $90 million and $95 million.
InvestingPro Insights
As Markforged Holding Corp (NYSE:MKFG) begins significant business action with its 1-for-10 reverse stock split, understanding the financial health and market sentiment surrounding the company can give investors a clearer picture. Here are some key insights based on the latest data from InvestingPro:
The company has a market capitalization of approximately $414.63 million, reflecting its size within the computer equipment industry. Notably, Markforged boasts a high profitability, standing at 48.42% in the last twelve months from Q2 2024, which shows strong efficiency in their manufacturing processes relative to peers. However, investors should be aware of the company's performance challenges, as shown by a significant decline in revenue of 17.17% over the same period.
From an investment perspective, Markforged is trading at a low Price/Book multiple of 0.31, suggesting that the market may be undervaluing the company's assets relative to its share price. Additionally, the stock is currently in oversold territory according to the Relative Strength Index (RSI), which could attract investors looking for potential stocks.
InvestingPro Tips highlights that Markforged is facing a cash burn problem, as it quickly uses up its available reserves. This is an important factor for investors to consider, especially in the context of a skewed stock split and the company's strategic direction. In addition, although the company has more cash than debt, which is a good sign, analysts do not expect the company to be profitable this year.
For those looking for a broader analysis and more details, InvestingPro offers a wide range of tips on Markforged Holding Corp, which can further guide investment decisions.
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