Inseego Announces Reverse Stock Split
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Insights
A 1-for-10 reverse stock split is a significant corporate action that can have an immediate effect on a company's stock price. Typically, a reverse split is implemented by companies seeking to increase their share price to remain listed on major exchanges or to improve the stock's perception among investors. It is essential to understand that while the share price may increase due to the reduced number of shares, the company's overall market capitalization remains unchanged. This is because a reverse split does not impact the underlying fundamentals of the company.
From a financial analysis perspective, it's important to monitor the stock's performance post-split. If the price increases, it could attract institutional investors who may have previously avoided the stock due to its lower price. However, if the market views this move as a cosmetic change without substantial improvement in the company's performance, the price may not sustain the initial bump. Additionally, the liquidity of the stock might be affected, as there will be fewer shares available for trading.
In the context of market trends, reverse stock splits are often perceived negatively by the market, as they can be seen as an attempt by a company to artificially maintain compliance with stock exchange listing requirements. The perception can be especially strong if a company has been struggling with its performance or if it's in a sector that is currently out of favor. However, in some cases, a reverse split can be part of a broader strategic turnaround plan that could potentially lead to positive outcomes.
It is crucial to analyze the company's sector performance, competitive positioning and growth prospects. Investors and analysts should assess whether Inseego Corp. is taking this step as a purely defensive measure or as part of a strategic repositioning that could drive future growth. For example, in the tech sector, where Inseego operates, rapid innovation and market dynamics can significantly impact a company's performance and stock valuation.
From a legal standpoint, the reverse stock split follows a clear process of shareholder approval and charter amendment. The company's adherence to this process demonstrates compliance with corporate governance standards and securities regulations. The adjustment of outstanding convertible notes to reflect the reverse split is also a standard procedure to ensure the rights of note holders are preserved.
Investors should be aware that while no legal red flags are raised by this announcement, the effectiveness of a reverse stock split in achieving the desired outcomes, such as maintaining listing requirements or improving investor sentiment, is not guaranteed. The legal framework ensures transparency and fairness in the process, but it does not assess the financial wisdom of such a corporate action.
Common Stock Will Begin Trading on a Split-Adjusted Basis on January 24, 2024
As previously disclosed, at the Company’s annual meeting of stockholders held on September 5, 2023, the Company's stockholders voted to approve an amendment to the Company's Charter to effect a Reverse Stock Split of the Company's common stock at a ratio of between 1-for-5 and 1-for-10, with such ratio and the implementation and timing of such Reverse Stock Split to be determined by the Company's board of directors. The board of directors subsequently approved the implementation of a 1-for-10 Reverse Stock Split.
As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to the Effective Time will be automatically reclassified as and converted into one-tenth (1/10) of a share of common stock. The Reverse Stock Split will affect all stockholders uniformly and will not alter any stockholder's percentage interest in the Company's equity, except to the extent that the Reverse Stock Split would result in a stockholder owning a fractional share. No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive a fractional share will instead be entitled to receive cash in lieu of such fractional share from the Company's transfer agent, Computershare.
The Reverse Stock Split will not change the par value of the common stock or the authorized number of shares of common stock. All outstanding convertible notes entitling their holders to purchase or obtain or convert into shares of our common stock will be adjusted, as required by the terms of these securities.
About Inseego Corp.
Inseego Corp. is the industry leader in 5G Enterprise cloud WAN solutions, with millions of end customers and thousands of enterprise and SMB customers on its 4G, 5G, and cloud platforms. Inseego's 5G Edge Cloud combines the industry's best 5G technology, rich cloud networking features, and intelligent edge applications. Inseego powers new business experiences by connecting distributed sites and workforces, securing enterprise data, and improving business outcomes with intelligent operational visibility---all over a 5G network. For more information on Inseego, visit www.inseego.com #Putting5GtoWork
Cautionary Note Regarding Forward-Looking Statements
Some of the information presented in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and often contain words such as “may,” “estimate,” “anticipate,” “believe,” “expect,” “intend,” “plan,” “project,” “will” and similar words and phrases indicating future results. The information presented in this news release related to the Reverse Stock Split and other statements that are not purely historical facts are forward-looking. These forward-looking statements are based on management’s current expectations, assumptions, estimates, and projections. They are subject to significant risks and uncertainties that could cause results to differ materially from those anticipated in such forward-looking statements. We, therefore, cannot guarantee future results, performance, or achievements. Actual results could differ materially from our expectations.
Factors that could cause actual results to differ materially from the Company’s expectations include: (1) the future demand for wireless broadband access to data and asset management software and services and our ability to accurately forecast; (2) the growth of wireless wide-area networking and asset management software and services; (3) customer and end-user acceptance of the Company’s current product and service offerings and market demand for the Company’s anticipated new product and service offerings; (4) dependence on a small number of customers for a significant portion of the Company’s revenues and accounts receivable; (5) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (6) dependence on third-party manufacturers and key component suppliers worldwide; (7) the impact that new or adjusted tariffs may have on the cost of components or our products, and our ability to sell products internationally; (8) the impact of fluctuations of foreign currency exchange rates; (9) the impact of supply chain challenges on our ability to source components and manufacture our products; (10) unexpected liabilities or expenses; (11) the Company’s ability to introduce new products and services in a timely manner, including the ability to develop and launch 5G products at the speed and functionality required by our customers; (12) litigation, regulatory and IP developments related to our products or components of our products; (13) the Company’s ability to raise additional financing when the Company requires capital for operations or to satisfy corporate obligations; (14) the Company’s plans and expectations relating to acquisitions, divestitures, strategic relationships, international expansion, software and hardware developments, personnel matters, and cost containment initiatives, including restructuring activities and the timing of their implementations; (15) the global semiconductor shortage and any related price increases or supply chain disruptions, (16) the potential impact of COVID-19 or other global public health emergencies on the business, (17) the impact of high rates of inflation and rising interest rates, and (18) the impact of geopolitical instability on our business.
These factors, as well as other factors set forth as risk factors or otherwise described in the reports filed by the Company with the SEC (available at www.sec.gov), could cause results to differ materially from those expressed in the Company’s forward-looking statements. The Company assumes no obligation to update publicly any forward-looking statements, even if new information becomes available or other events occur in the future, except as otherwise required under applicable law and our ongoing reporting obligations under the Securities Exchange Act of 1934, as amended.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240122856827/en/
Investor Relations Contact:
IR@inseego.com
Source: Inseego Corp.
FAQ
When will the 1-for-10 reverse stock split of Inseego Corp. (INSG) common stock be effective?
What will be the new CUSIP number for Inseego Corp. (INSG) common stock after the reverse stock split?
Will the reverse stock split affect the trading of Inseego Corp. (INSG) common stock on the Nasdaq Global Select Market?
What will happen to fractional shares after the reverse stock split of Inseego Corp. (INSG) common stock?
