- Exicure stock is up 2100% premarket
- This is the result of a reverse stock split
- The change in XCUR's real, not nominal, stock price might be as much as minus 45%
Exicure (NASDAQ: XCUR) stock has achieved the remarkable feat of recording a 2,100% plus stock price rise which really translates into a 21% and change XCUR stock price fall. The problem perhaps being that investors would have preferred a real solution to corporate problems and business issues rather than a simple playing with pieces of paper one.
The particular problem that has to be solved was that the NASDAQ listing itself was at risk. The Exicure stock had traded well below $1 for long enough that the listing was on the way to being cancelled. That would mean relation to the OTC markets, lower liquidity, more difficulty raising capital and so on. One answer to this is for the operating business to improve. The other is to do a reverse stock split, a consolidation as the Brits call it.
Exicure chose the reverse stock split option. No, this should in fact increase the value of the company overall. It removes the threat of the loss of the NASDAQ listing and so, presumably, XCUR stock is therefore more valuable. That's not quite what happened though.
Quite the opposite happened to Exicure stock as the consolidation, or reverse stock split, was announced. The current listing of the price is that it has risen 2100% and change premarket. This is, calculated one way, a 20% and change fall. But it's also possible to run these numbers a different way and see that the situation is worse than that.
So, Exicure announces that NASDAQ is threatening the quote, thus, XCOR announces the reverse stock split. This is a one for 30 consolidation, meaning that for every 30 shares held previously now there is one. That should, logically enough, produce a 3,000% rise in the Exicure stock price. and we'd expect perhaps a bit more too – that threat of the NASDAQ quote and listing disappearing would be beaten.
But what actually happened was a 4 cent (27%) decline in the XCUR stock price upon the announcement and then this 2,100 rise premarket as the newly consolidated stock is being quoted. At which point we can and should redo the calculation. The stock was at 13 cents, so 30 for one should lead to this morning's price being $3.90. In fact the price is $2.11 at pixel time. That's a $1.79 behind where it “should” be. Or, in fact, a 46% fall in the XCUR stock price.
Which we agree is an impressive achievement, saving the NASDAQ quotation at a 45% decline in the real, not nominal stock price. Now saving the NASDAQ quotation is something that needs to be done. A reverse stock split way well have been the only way to do this in the short term. But it should have produced a rise in the real value of the company – that threat of delisting is removed – but it has in fact produced a significant fall in the real value of Exicure. A reasonable assumption might be that investor hoped for a real, not just a nominal, solution to the corporate stock valuation.