Desktop Metal to Effect a Reverse Stock Split
Desktop Metal (NYSE: DM) announced a 1-for-10 reverse stock split for its Class A common stock, effective June 10, 2024, after trading hours.
The stock will start trading on a split-adjusted basis on June 11, 2024, to meet NYSE’s minimum bid price requirement.
The new CUSIP number will be 25058X 303. Approved by shareholders on June 7, 2024, the reverse split will reclassify every 10 existing shares into one new share.
Proportional adjustments will be made to equity awards and plans. No fractional shares will be issued; cash payments will be made for fractional entitlements.
The transfer agent, Continental Stock Transfer & Trust, will handle the exchange. No action is required by shareholders holding shares electronically or through brokers.
- The reverse stock split aims to meet the minimum bid price requirement for continued NYSE listing.
- Shareholders approved the reverse stock split, indicating a consensus for the move.
- No action required by shareholders for the transition, simplifying the process.
- Proportional adjustments to equity awards ensure fair reclassification.
- The reverse stock split indicates the company is currently failing to meet NYSE’s minimum bid price requirement.
- A reverse split can signal financial difficulties, potentially impacting investor confidence.
- No fractional shares issued; shareholders receive cash, leading to potential small losses.
- Reverse stock splits often result in decreased liquidity in the market.
Insights
Reverse stock splits are often implemented by companies to increase the per-share price of their stock. For Desktop Metal, this move aims to meet the minimum bid price requirement for continued listing on the NYSE, a important factor for maintaining investor confidence and market liquidity. The 1-for-10 reverse stock split means every 10 shares will be consolidated into one, effectively multiplying the stock price by 10 while reducing the number of shares tenfold.
Short-term, this could lead to a perceived increase in the stock’s value, but it does not inherently improve the company's market capitalization or financial health. For long-term investors, it's essential to scrutinize whether this action is a stopgap measure or part of a broader strategy to address underlying business challenges. Reverse splits can sometimes signal financial distress, even though they might make the stock more attractive to institutional investors who avoid 'penny stocks'.
For retail investors, understanding that the
From a market perspective, the reverse stock split could help Desktop Metal avoid delisting from the NYSE, which would be a significant benefit. Delisting can severely impact a company's stock liquidity and accessibility to investors. Ensuring compliance with NYSE requirements keeps the stock in play for a broad range of investors, including those who adhere to institutional investment mandates that avoid stocks trading below certain price thresholds.
However, it's important to note that reverse stock splits don’t inherently solve operational or strategic issues a company might face. Market perception can vary widely; some investors may view this as a positive step towards stabilization, while others might see it as a red flag indicating deeper financial or operational problems. Investors should look at the company's earnings reports, future growth prospects and industry position to gauge whether the reverse split is a precursor to sustained performance improvements.
DM common stock expected to begin trading on a 1-to-10 split-adjusted basis on June 11, 2024
The primary goal of the reverse stock split is to increase the per share market price of the Company’s Class A common stock to meet the minimum per share bid price requirement for continued listing on the NYSE. The reverse stock split was approved by the Company’s stockholders at its annual meeting of stockholders held on June 7, 2024. On June 7, 2024, following the annual meeting of stockholders, the Company’s Board of Directors approved the reverse stock split at the ratio of 1-for-10.
As a result of the reverse stock split, every 10 shares of the Company’s Class A common stock issued and outstanding will be automatically reclassified into one new share of the Company’s Class A common stock. Proportionate adjustments will be made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans and certain existing agreements. The common stock issued pursuant to the reverse stock split will remain fully paid and non-assessable. The reverse stock split will not affect the number of authorized shares of common stock or the par value of the common stock.
No fractional shares will be issued in connection with the reverse stock split. Stockholders who would otherwise be entitled to receive fractional shares as a result of the reverse stock split will be entitled to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing sales price per share of the common stock (as adjusted to give effect to the reverse stock split) on the NYSE on June 10, 2024, the last trading day immediately preceding the effective time of the reverse stock split.
Continental Stock Transfer & Trust (“Continental”), the Company’s transfer agent, is acting as the exchange agent for the reverse stock split. Stockholders holding their shares electronically in book-entry form and stockholders who hold their shares through a bank, broker or other nominee will not need to take any action. The Company does not have any outstanding certificated shares. Stockholders owning shares through a bank, broker or other nominee will have their positions adjusted to reflect the Reverse Stock Split and will receive payment for any fractional shares in accordance with their respective bank’s, broker’s, or nominee’s particular processes.
Additional information about the reverse stock split can be found in the Company’s definitive proxy statement filed with the Securities and Exchange Commission (the “SEC”) on April 23, 2024, which is available free of charge at the SEC’s website, www.sec.gov, and on the Company’s website at desktopmetal.com.
About Desktop Metal, Inc.
Desktop Metal (NYSE:DM) is driving Additive Manufacturing 2.0, a new era of on-demand, digital mass production of industrial, medical, and consumer products. Our innovative 3D printers, materials, and software deliver the speed, cost, and part quality required for this transformation. We’re the original inventors and world leaders of the 3D printing methods we believe will empower this shift, binder jetting and digital light processing. Today, our systems print metal, polymer, sand and other ceramics, as well as foam and recycled wood. Manufacturers use our technology worldwide to save time and money, reduce waste, increase flexibility, and produce designs that solve the world’s toughest problems and enable once-impossible innovations. Learn more about Desktop Metal and our #TeamDM brands at www.desktopmetal.com.
Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements generally relate to future events, such as the expected timing of the reverse stock split, the impact of the reverse stock split on the Company’s share price, and the Company’s ability to meet the minimum per share bid price requirement for continued listing on the NYSE. You are cautioned that such statements are not guarantees of future performance and that Desktop Metal’s actual results may differ materially from those set forth in the forward-looking statements. All of these forward-looking statements are subject to risks and uncertainties that may change at any time. Factors that could cause Desktop Metal’s actual expectations to differ materially from these forward-looking statements include Desktop Metal’s ability to continue to comply with applicable listing standards of the NYSE and the other factors under the heading “Risk Factors” set forth in Desktop Metal’s Annual Report on Form 10-K, as supplemented by Desktop Metal’s quarterly reports on Form 10-Q. Such filings are available on our website or at www.sec.gov. You should not place undue reliance on these forward-looking statements, which are made only as of the date of this press release. Desktop Metal undertakes no obligation to publicly update or revise forward-looking statements to reflect subsequent developments, events, or circumstances, except as may be required under applicable securities laws.
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Investor Relations:
(857) 504-1084
DesktopMetalIR@icrinc.com
Media Relations:
Sarah
(313) 715-6988
sarahwebster@desktopmetal.com
Source: Desktop Metal, Inc.
FAQ
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