Aterian Announces Reverse Stock Split
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Insights
A reverse stock split is a financial maneuver that companies often employ to boost their stock price to comply with listing requirements or to improve the stock's perceived value. In Aterian's case, the 1-for-12 reverse stock split is a strategic move to maintain its listing on Nasdaq by ensuring the stock price stays above the $1.00 minimum threshold. This action typically indicates an attempt to stabilize a company's market position and avoid the negative connotations of a low-priced stock.
From an investor's perspective, the immediate effect is cosmetic, as the market capitalization remains unchanged. However, it may alter the liquidity and marketability of the shares. A higher stock price can sometimes attract institutional investors who are prohibited from holding stocks below a certain price. Conversely, it could also deter small investors due to the higher price per share. The long-term impact will largely depend on the company's operational performance post-split. If the underlying business fundamentals do not improve, the benefits of the reverse split may be short-lived.
The market often reacts to reverse stock splits with skepticism, as they can be perceived as an admission that the company has been struggling to meet exchange listing standards. The timing and ratio of Aterian's reverse split suggest a significant reduction in shares outstanding, which could lead to increased volatility due to a lower float. It is important for investors to monitor the company's future earnings reports and any strategic initiatives that might signal a turnaround.
Additionally, the adjustment of warrants, pre-funded warrants and stock options will affect the terms of these derivatives. Investors holding these instruments should be aware of the changes in exercise prices and conversion ratios. The market's reception of these adjustments can provide insights into investor sentiment regarding the company's future prospects.
The legal implications of a reverse stock split involve amendments to the company's Amended and Restated Certificate of Incorporation, as seen with Aterian. Shareholder approval is a legal prerequisite for such a change, reflecting corporate governance practices. The issuance of a new CUSIP number following the reverse split is a standard procedure that facilitates tracking and identification of the new stock denomination.
For shareholders, the rounding up of fractional shares to whole shares is a minor benefit, as it avoids the inconvenience of dealing with fractional share ownership. However, the legal aspect to note is that all adjustments to securities must be communicated clearly to holders and be in compliance with regulatory standards to ensure transparency and fairness in the process.
Expected to Start Trading on a Split-adjusted Basis Beginning March 22, 2024
NEW YORK, March 20, 2024 (GLOBE NEWSWIRE) -- Aterian, Inc. (Nasdaq: ATER) (“Aterian” or the “Company”) has announced a 1-for-12 reverse stock split of its common stock, effective with the market opening on Friday, March 22, 2024.
This move is aimed at meeting Nasdaq's continued listing standards, specifically to increase the per share price above the minimum
The reverse split was authorized by the Company's shareholders on August 11, 2023, granting the Company's Board of Directors (the "Board") the power to determine the timing and ratio of the split. The Board has now decided on the 1-for-12 ratio and will amend the Company's Amended and Restated Certificate of Incorporation to reflect this change. Consequently, every twelve shares of issued common stock will be combined into one share of common stock.
The reverse split will result in a new CUSIP number (02156U200) for the Company's common stock, which are expected to begin trading on a split-adjusted basis from March 22, 2024. The number of outstanding common stock will decrease, and the par value of the common stock and the authorized shares of the Company will be unaffected.
No fractional shares will be issued, and shareholders holding fractional shares following the reverse split will receive a rounded up whole number of shares instead.
Adjustments will also be made to the Company's outstanding warrants, pre-funded warrants, and stock options. The number of shares into which these securities are convertible or exercisable will be adjusted in line with the reverse split, as will the exercise prices of these securities.
About Aterian, Inc.
Aterian, Inc. (Nasdaq: ATER) is a technology-enabled consumer products company that builds and acquires leading e-commerce brands with top selling consumer products, in multiple categories, including home and kitchen appliances, health and wellness and air quality devices. The Company sells across the world's largest online marketplaces with a focus on Amazon and Walmart in the U.S. and on its own direct to consumer websites.
Forward Looking Statements
All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements These forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties and other factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to customer demand for our products in light of the current macroeconomic environment in the U.S. and globally; global shipping disruptions; our ability to continue as a going concern; our ability to meet financial covenants with our lenders; our ability to create operating leverage and efficiency when integrating companies that we acquire or have acquired, including through the use of our team’s expertise, the economies of scale of our supply chain and automation driven by our platform; our ability to grow internationally and through the launch of products under our brands and the acquisition of additional brands; the impact of COVID-19, the war in the Ukraine, the rising tensions between China and Taiwan and other macroeconomic factors, including their impact on consumer demand, our cash flows, financial condition, forecasting and revenue growth rate; our supply chain including sourcing, manufacturing, warehousing and fulfillment; our ability to manage expenses, working capital and capital expenditures efficiently; our business model and our technology platform; the impact of intangible assets such as goodwill, and other impairments; disruptions to the Company's information technology systems, including but not limited to potential or actual security breaches of systems protecting consumer and employee information or other types of cybercrimes or cybersecurity attacks; our ability to disrupt the consumer products industry; our ability to maintain and grow market share in existing and new product categories; our ability to generate profitability and stockholder value; international tariffs and trade measures; inventory management, product liability claims, recalls or other safety and regulatory concerns; reliance on third party online marketplaces; seasonal and quarterly variations in our revenue and expenses; acquisitions of other companies and technologies and our ability to successfully integrate such companies and technologies with our business; our ability to continue to access debt and equity capital (including on terms advantageous to the Company) and the extent of our leverage; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), all of which you may obtain for free on the SEC’s website at www.sec.gov.
Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
FAQ
What is the purpose of Aterian's reverse stock split (ATER)?
When will the reverse stock split for Aterian (ATER) be effective?
How will the reverse stock split impact Aterian's outstanding shares?
What changes will occur to Aterian's securities post the reverse stock split?
