Fluent Announces Reverse Stock Split

Rhea-AI Summary

Fluent, Inc. (FLNT) announces a 1-for-6 reverse stock split to regain compliance with Nasdaq listing requirements. The split, effective April 11, 2024, aims to raise the stock price above $1.00. Shareholders will see a reduction in outstanding shares and adjustments to equity incentive plans.

Insights

Financial Analyst

The reverse stock split announced by Fluent, Inc. is a strategic move aimed at addressing the company's non-compliance with Nasdaq's minimum bid price requirement. This is a common tactic employed by public companies facing delisting threats due to their stock trading below the exchange's minimum threshold. By consolidating shares, the company effectively elevates its share price, albeit without adding intrinsic value to the company.

Investors should note that while the reverse split does not directly impact the company's market capitalization, it may influence investor perception. Historically, reverse splits have been associated with companies in distress, which could lead to a negative sentiment. However, in the short term, this action might provide the necessary compliance to maintain the listing, which is essential for ensuring liquidity and access to capital markets. Long-term implications are more uncertain and hinge on the company's operational performance post-split.

From a technical standpoint, the reduction in the number of shares available for trading could lead to lower liquidity and higher volatility in the stock price. The proportional adjustment of equity incentive plans and outstanding equity awards ensures fairness in terms of the economic value pre and post-split, but it may not fully mitigate the psychological impact on stakeholders who might perceive the consolidation as a devaluation of their awards.

Market Research Analyst

Fluent's decision to undergo a reverse stock split reflects a broader trend among companies seeking to optimize their stock's marketability. The market's reaction to such news typically varies, with some investors interpreting it as a red flag, while others may see it as a company taking necessary steps to stabilize its stock performance.

Market research indicates that the effectiveness of reverse stock splits in the long term is mixed. It is critical for Fluent to accompany this financial maneuver with robust operational strategies to improve its fundamentals. Investors will likely monitor the company's performance closely in the subsequent quarters to assess the efficacy of the reverse split and whether it aligns with broader efforts to enhance shareholder value.

The reduction in the number of shares also has implications for the stock's trading dynamics. It is not uncommon to see a temporary increase in share price following a reverse split, but sustained improvement typically requires fundamental growth or positive changes in the company's strategic direction.

Legal Expert

The legal process Fluent, Inc. is undertaking to effectuate the reverse stock split involves filing a Certificate of Amendment to its Certificate of Incorporation. This procedural step is a formality that aligns with corporate governance practices and state law requirements.

It is also noteworthy that the reverse stock split does not alter stockholder percentage ownership except for minor adjustments due to fractional shares. The legal framework ensures equity among shareholders during such corporate actions. However, shareholders, particularly those with smaller holdings, should be aware of the implications of rounding fractional shares, as this could marginally increase their ownership stake.

Furthermore, the role of the transfer agent, in this case, Continental Stock Transfer & Trust Company, is important in facilitating a smooth transition for shareholders. Their responsibility includes managing the logistics of exchanging stock certificates and updating electronic book-entry shareholdings, which is a significant undertaking in ensuring that the reverse stock split is executed without shareholder complications.

Shares Will Begin Trading on a Split-Adjusted Basis on April 12, 2024

NEW YORK, April 10, 2024 (GLOBE NEWSWIRE) -- Fluent, Inc. (NASDAQ: FLNT), a leading data-driven performance marketing company, today announced that it will effect a 1-for-6 reverse split of the issued shares of its common stock, effective at 6:00 p.m. Eastern Time on April 11, 2024. The Company's common stock will begin trading on a reverse stock split-adjusted basis at the opening of the market on Friday, April 12, 2024. Following the reverse stock split, the Company’s common stock will continue to trade on The Nasdaq Capital Market under the symbol “FLNT” with the new CUSIP number 34380C 201.

Fluent is implementing the reverse stock split with the objective of regaining compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market. The Company has until April 29, 2024 to demonstrate compliance with this requirement. To demonstrate compliance, the closing bid price of Fluent’s common stock must be at least $1.00 per share for a minimum of ten consecutive business days. The Company intends to file a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect the reverse stock split.

As a result of the reverse stock split, every six (6) shares of the Company’s common stock issued and outstanding or held by the Company in treasury stock will automatically be combined and reclassified into one share of common stock. No fractional shares will be issued as a result of the reverse stock split. Stockholders who would otherwise be entitled to receive a fractional share will receive an additional fraction of a share of common stock to round up to the next whole share. The reverse stock split will affect all stockholders uniformly and will not alter any stockholder’s percentage ownership interest or any stockholder’s proportionate voting power, except for immaterial adjustments that may result from the treatment of fractional shares. There will be no change in the number of authorized shares of common stock or the par value per share of the common stock.

The reverse stock split will reduce the number of issued and outstanding shares of the Company’s common stock from approximately 81.6 million shares to approximately 13.6 million shares and will reduce the issued shares of common stock held by the Company in treasury stock from approximately 4.6 million shares to approximately 768 thousand shares.

The number of shares available for issuance under the Company’s equity incentive plans and the number of shares issuable pursuant to each outstanding equity award immediately prior to the reverse stock split will be reduced proportionately at the same ratio as the reverse stock split, and the exercise price for each outstanding stock option will be increased in inverse proportion to the reverse stock split ratio.

The combination of, and reduction in, the issued shares of common stock as a result of the reverse stock split will occur automatically at the effective time of the reverse stock split without any additional action on the part of the Company’s stockholders. The Company's transfer agent, Continental Stock Transfer & Trust Company (“Continental”), is acting as the exchange agent for the reverse stock split and will provide instructions to stockholders of record holding shares in certificated form regarding the process for exchanging their stock certificates. In addition, Continental will send stockholders of record holding their shares electronically in book-entry form a transaction statement indicating the number of shares of common stock such stockholders hold after the reverse stock split. Stockholders who hold their shares through a broker, bank, or other nominee will have their positions adjusted to reflect the reverse stock split, subject to their broker, bank, or other nominee’s particular processes, and will not be required to take any action in connection with the reverse stock split.

Additional information regarding the reverse stock split can be found in the Company’s definitive proxy statement for the special meeting of stockholders of the Company held on March 18, 2024, which was filed with the U.S. Securities and Exchange Commission on February 12, 2024, a copy of which is available at www.sec.gov and on the Company's website.

About Fluent, Inc.

Fluent, Inc. (NASDAQ: FLNT) is a leader in performance marketing, delivering customer acquisition solutions through our digital media portfolio, global commerce partnerships, and proprietary data and tech. We introduce brands to consumers through outcome-based programs across untapped channels, including our post-transaction ad solution and rewarded discovery platform. Since 2010, we have continued to innovate and iterate on the most effective strategies that connect our partners and brands with their most valuable customers, helping to drive lower-funnel engagements that exceed client expectations. For more information, please visit https://www.fluentco.com/.

Forward-Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical facts are “forward-looking statements” within the meaning of federal securities laws. In some cases, you can identify forward-looking statements by terminology such as “will,” “would,” “expect,” “intend,” “plan,” “objective,” or comparable terminology referencing future events, conditions or circumstances, or the negative of such terms. Forward-looking statements in this press release include, without limitation, statements about the results, timing and completion of the reverse stock split and the potential effect of the reverse stock split on the Company’s ability to regain compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market. Although Fluent believes that it has a reasonable basis for the forward-looking statements contained in this press release, they are based on management’s current beliefs and expectations about future events and circumstances and are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond the Company’s control. These risk factors include, without limitation, the risk that the Certificate of Amendment to the Company’s Certificate of Incorporation, as amended, may not be timely submitted to or processed for filing by the Secretary of State of the State of Delaware, the risk that The Nasdaq Stock Market LLC may not process the reverse stock split on the expected timeline, the potential for Nasdaq to halt trading in the Company’s common stock, and the risk that after the reverse stock split the closing bid price of the Company’s common stock is not at least $1.00 per share for a minimum of ten consecutive business days. These and other risk factors described under “Risk Factors” in Fluent’s most recently filed annual report on Form 10-K, as updated from time to time in Fluent’s quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements in this press release. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. Fluent undertakes no obligation to update any forward-looking statement contained in this press release to reflect events that occur or circumstances that exist after the date of this press release, except as required by law.

Contact Information: 
Investor Relations
Fluent, Inc.
InvestorRelations@fluentco.com 

FAQ

When will Fluent, Inc. (FLNT) begin trading on a split-adjusted basis?

Fluent, Inc. (FLNT) will begin trading on a split-adjusted basis on April 12, 2024.

Why is Fluent, Inc. (FLNT) implementing a reverse stock split?

Fluent, Inc. (FLNT) is implementing a reverse stock split to regain compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market.

What is the deadline for Fluent, Inc. (FLNT) to demonstrate compliance with the bid price requirement?

Fluent, Inc. (FLNT) has until April 29, 2024, to demonstrate compliance with the $1.00 minimum bid price requirement.

How will the reverse stock split affect Fluent, Inc. (FLNT) shareholders?

The reverse stock split will combine every six (6) shares into one share, reducing the number of outstanding shares.

What will happen to fractional shares after the reverse stock split?

No fractional shares will be issued. Shareholders entitled to a fraction will receive an additional fraction to round up to the next whole share.