Asset Entities Inc. Announces Reverse Stock Split to Regain Compliance with Nasdaq’s Minimum Bid Price
Asset Entities announced a 1-for-5 reverse stock split for its Class A and Class B common stocks, effective July 2, 2024, to comply with Nasdaq's minimum bid price requirement. Each 5 shares of existing stock will convert into one share, and the authorized shares will reduce to 2,000,000 for Class A and 38,000,000 for Class B. The par value and other stock terms remain unchanged. Fractional shares will be rounded up, and stockholders need not take action as changes will reflect automatically in brokerage accounts. Additional details are available in the SEC filing dated June 28, 2024.
- The reverse stock split aims to regain compliance with Nasdaq's minimum bid price requirement.
- The reduction in the number of authorized shares could potentially decrease share dilution.
- The reverse stock split does not alter the par value or other terms of the common stock, which may not address underlying issues affecting the stock price.
Insights
Reverse stock splits are often executed by companies to meet the minimum bid price requirement for stock exchanges. This move by Asset Entities Inc. to implement a 1-for-5 reverse stock split reflects their effort to maintain their Nasdaq listing. This kind of action is typically perceived as a short-term strategy to avoid delisting, which can be a red flag for some investors.
For retail investors, understanding the implications is crucial. By reducing the number of shares, the stock price theoretically increases, making the stock more attractive to institutional investors. However, this doesn’t change the underlying value of the company. It’s important to note that the par value and other terms of the stock remain unchanged, ensuring no fundamental shifts in equity value for existing shareholders.
A reduction in the number of shares can also lead to increased earnings per share (EPS) if the company reports stable or improved earnings, although this is a mechanical adjustment rather than a real improvement in business performance. Additionally, the adjustment in exercise or conversion prices for equity awards and warrants maintains consistency and fairness.
Retail investors should monitor the trading activity post-split as it may indicate market sentiment. Typically, long-term investors view reverse splits with caution unless accompanied by strong fundamentals and growth prospects. This move doesn’t inherently signal a business turnaround, but rather a tactical maneuver to comply with listing requirements.
From a market perspective, a reverse stock split can often lead to volatility. Initially, the stock price might see an uptick due to the reduced share count, but without substantial changes in the company's business model or market performance, this could be short-lived.
For a company like Asset Entities Inc., operating in the digital marketing and content delivery sphere, the real test lies in their ability to leverage this structural change to drive new business and growth. Investors should look for subsequent announcements regarding operational performance, new client acquisitions, or technological advancements that could justify the reverse split beyond mere compliance.
Historically, companies that initiate reverse stock splits without underlying business strength can see a decline in stock value over time. Therefore, while the immediate impact might stabilize the share price, the long-term outlook depends heavily on Asset Entities' ability to deliver solid business results.
DALLAS, June 28, 2024 (GLOBE NEWSWIRE) -- Asset Entities Inc. (“Asset Entities” or the “Company”) (NASDAQ: ASST), a provider of digital marketing and content delivery services across Discord and other social media platforms, and a Ternary Payment Platform company, today announced a 1-for-5 reverse stock split (the “Reverse Stock Split”) of its class A common stock,
The Company’s Class B Common Stock will continue to trade on The Nasdaq Capital Market tier of The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “ASST” and will begin trading on a split-adjusted basis when the market opens on Tuesday, July 2, 2024. The new CUSIP number for the Company’s Class B Common Stock following the Reverse Stock Split will be 04541A204.
The Reverse Stock Split is intended to enable the Company to regain compliance with the minimum bid price requirement for continued listing on Nasdaq.
As a result of the Reverse Stock Split, every 5 shares of the Company’s issued and outstanding common stock as of the effective time will be combined into one share of common stock. In addition, the Reverse Stock Split will effect a reduction in the number of shares issuable pursuant to the Company’s equity awards, warrants and convertible preferred stock outstanding as of the effective time of the Reverse Stock Split with a corresponding increase in the exercise or conversion price per share. The par value and other terms of the Company’s common stock are not affected by the Reverse Stock Split. Also as a result of the Reverse Stock Split, the number of the Company’s authorized shares of Class A Common Stock and Class B Common Stock will be proportionally reduced from 10,000,000 and 190,000,000, respectively, to 2,000,000 and 38,000,000, respectively.
No fractional shares will be issued in connection with the Reverse Stock Split. Fractional shares resulting from the Reverse Stock Split will be rounded up to the nearest whole share. VStock Transfer, LLC is acting as transfer and exchange agent for the Reverse Stock Split. Registered stockholders are not required to take any action to receive post-Reverse Stock Split shares. Stockholders who are holding their shares in electronic form at brokerage firms do not have to take any action as the effect of the Reverse Stock Split will automatically be reflected in their brokerage accounts.
Additional information about the Reverse Stock Split can be found in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 28, 2024, which is available free of charge at the SEC’s website, www.sec.gov, and on the Company’s website at assetentities.com.
About Asset Entities, Inc.
Asset Entities Inc. is a technology company providing social media marketing, management, and content delivery across Discord, TikTok, Instagram, X (formerly Twitter), YouTube, and other social media platforms. Asset Entities is believed to be the first publicly traded Company based on the Discord platform, where it hosts some of Discord’s largest social community-based education and entertainment servers. The Company’s AE.360.DDM suite of services is believed to be the first of its kind for the Design, Development, and Management of Discord community servers. Asset Entities’ initial AE.360.DDM customers have included businesses and celebrities. The Company also has its Ternary payment platform that is a Stripe-verified partner and CRM for Discord communities. The Company’s Social Influencer Network (SiN) service offers white-label marketing, content creation, content management, TikTok promotions, and TikTok consulting to clients in all industries and markets. The Company’s SiN influencers can increase the social media reach of client Discord servers and drives traffic to their businesses. Learn more at assetentities.com, and follow the Company on X (formerly Twitter) at @assetentities.
Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements. In addition, from time to time, representatives of the Company may make forward-looking statements orally or in writing. These forward-looking statements are based on expectations and projections about future events, which are derived from the information currently available to the Company. Such forward-looking statements relate to future events or the Company’s future performance, including its financial performance and projections, growth in revenue and earnings, and business prospects and opportunities. Forward-looking statements can be identified by those statements that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors including those that are described in the section titled “Risk Factors” in the Company’s periodic reports which are filed with the Securities and Exchange Commission. These and other factors may cause the Company’s actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake any responsibility to update the forward-looking statements in this release, except in accordance with applicable law.
Company Contacts:
Arshia Sarkhani, President and Chief Executive Officer
Michael Gaubert, Executive Chairman
Asset Entities Inc.
Tel +1 (214) 459-3117
Email Contact
Investor Contact:
Skyline Corporate Communications Group, LLC
Scott Powell, President
1177 Avenue of the Americas, 5th Floor
New York, NY 10036
Office: (646) 893-5835
Email: info@skylineccg.com
FAQ
What is the effective date for Asset Entities' reverse stock split?
What is the ratio for Asset Entities' reverse stock split?
What changes after Asset Entities' reverse stock split?
Why is Asset Entities conducting a reverse stock split?
What will be the new CUSIP number for Asset Entities' Class B Common Stock?
