LightInTheBox Announces ADS Ratio Change

Rhea-AI Summary

LightInTheBox Holding Co., (NYSE: LITB), an apparel e-commerce retailer, has announced plans to change its American Depositary Shares (ADS) ratio. The new ratio will be 1 ADS representing 12 ordinary shares, effective September 5, 2024. This change is equivalent to a 1-for-6 reverse ADS split. ADS holders will need to exchange every six existing ADSs for one new ADS. The company's ADSs will continue trading on the NYSE under the ticker 'LITB' with a new CUSIP number. No fractional new ADSs will be issued, and the depositary bank will sell fractional entitlements, distributing net proceeds to applicable ADS holders. The ADS trading price is expected to increase proportionately, although this is not guaranteed.

Positive

• Potential increase in ADS trading price following the ratio change
• Continued listing on the New York Stock Exchange

Negative

• Possible shareholder dilution due to the reverse ADS split
• Potential loss for investors holding fractional ADSs

Insights

Financial Analyst

LightInTheBox's ADS ratio change is a strategic move that could have mixed implications for investors. The 1:6 reverse split might boost the stock's perceived value and potentially attract institutional investors who often have minimum share price requirements. However, it's important to note that this change doesn't alter the company's fundamental value or market capitalization.

The reduction in outstanding ADSs could lead to increased volatility due to lower liquidity. While the company expects the ADS price to increase proportionately, there's no guarantee of this outcome. Investors should be aware that reverse splits are sometimes viewed as a red flag, often implemented by companies struggling to maintain stock exchange listing requirements or to improve their image. It's essential to scrutinize LightInTheBox's underlying financial performance and growth prospects beyond this cosmetic change.

Market Research Analyst

This ADS ratio change reflects LightInTheBox's attempt to reposition itself in the competitive e-commerce landscape. As an apparel retailer with a global shipping model, the company faces challenges from both established players and emerging local competitors. The reverse split might be aimed at enhancing investor perception and potentially facilitating future capital raising efforts.

However, investors should focus on key performance indicators such as user acquisition costs, customer retention rates and average order value to gauge the company's true health. The e-commerce sector has seen significant shifts post-pandemic and LightInTheBox's ability to adapt to changing consumer behaviors and overcome logistical hurdles will be crucial. This financial maneuver should be viewed in the context of the company's broader strategy to compete effectively in the global online retail space.

SINGAPORE, Aug. 27, 2024 /PRNewswire/ -- LightInTheBox Holding Co., Ltd. (NYSE: LITB) ("LightInTheBox" or the "Company"), an apparel e-commerce retailer that ships products to consumers worldwide, today announced that it plans to change the ratio of its American depositary shares ("ADSs") to its ordinary shares (the "ADS Ratio Change"), par value US$0.000067 per share, from the current ratio of one (1) ADS representing two (2) ordinary shares to a new ratio of one (1) ADS representing twelve (12) ordinary shares. The Company aims to effectuate the ADS Ratio Change on or about September 5, 2024, U.S. Eastern Time (the "Effective Date").

For the Company's ADS holders, the ADS Ratio Change will have the same effect as a one-for-six reverse ADS split. Upon the Effective Date, ADS holders will be required to surrender and exchange every six existing ADSs they hold for one new ADS. The Bank of New York Mellon, as the depositary bank for the Company's ADS program, will arrange for the exchange. The Company's ADSs will continue to be traded on the New York Stock Exchange under the ticker symbol "LITB." The new CUSIP number for the Company's ADSs following the ADS Ratio Change will be 53225G201.

No fractional new ADSs will be issued in connection with the ADS Ratio Change. Instead, fractional entitlements to new ADSs will be aggregated and sold by the depositary bank, and the net cash proceeds from the sale of the fractional ADS entitlements (after deduction of fees, taxes, and expenses, where applicable) will be distributed to the applicable ADS holders by the depositary bank. The ADS Ratio Change will have no impact on the Company's underlying ordinary shares, and no ordinary shares will be issued or canceled in connection with the ADS Ratio Change.

As a result of the ADS Ratio Change, the ADS trading price is expected to increase proportionately upon the effectiveness of the ADS Ratio Change, although the Company can give no assurance that the ADS trading price after the ADS Ratio Change will be equal to or greater than six (6) times the ADS trading price before the change.

About LightInTheBox Holding Co., Ltd.

LightInTheBox is an apparel e-commerce retailer that ships products to consumers worldwide. With a focus on serving middle-aged and senior customers, LightInTheBox leverages its global supply chain and logistics networks, along with its in-house R&D and design capabilities, to offer a wide selection of comfortable, aesthetically pleasing and visually interesting apparel that brings fresh joy to customers. LightInTheBox operates its business through www.lightinthebox.com, www.ezbuy.sg and other websites as well as mobile applications, which are available in over 20 major languages and over 140 countries and regions. The Company is headquartered in Singapore, with additional offices in California, Shanghai and Beijing.

For more information, please visit www.lightinthebox.com. 

Investor Relations Contact

Investor Relations
LightInTheBox Holding Co., Ltd.
Email: ir@lightinthebox.com 

Jenny Cai
Piacente Financial Communications
Email: lightinthebox@tpg-ir.com 

Brandi Piacente
Piacente Financial Communications
Tel: +1-212-481-2050
Email: lightinthebox@tpg-ir.com 

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "potential," "continue," "ongoing," "targets" and similar statements. Among other things, statements that are not historical facts, including statements about LightInTheBox's beliefs and expectations, the business outlook and quotations from management in this announcement, as well as LightInTheBox's strategic and operational plans, are or contain forward-looking statements.

LightInTheBox may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward- looking statement, including but not limited to the following: LightInTheBox's goals and strategies; LightInTheBox's future business development, results of operations and financial condition; the expected growth of the global online retail market; LightInTheBox's ability to attract customers and further enhance customer experience and product offerings; LightInTheBox's ability to strengthen its supply chain efficiency and optimize its logistics network; LightInTheBox's expectations regarding demand for and market acceptance of its products; competition; fluctuations in general economic and business conditions and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in LightInTheBox's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and LightInTheBox does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

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SOURCE LightInTheBox Holding Co., Ltd.

FAQ

What is the new ADS ratio for LightInTheBox (LITB) and when does it take effect?

LightInTheBox (LITB) is changing its ADS ratio from 1 ADS representing 2 ordinary shares to 1 ADS representing 12 ordinary shares. This change is set to take effect on September 5, 2024.

How will the ADS ratio change affect LightInTheBox (LITB) shareholders?

The ADS ratio change will have the same effect as a 1-for-6 reverse ADS split. Shareholders will need to surrender and exchange every 6 existing ADSs for 1 new ADS. This may result in a proportional increase in the ADS trading price.

Will LightInTheBox (LITB) continue to trade on the NYSE after the ADS ratio change?

Yes, LightInTheBox (LITB) will continue to trade on the New York Stock Exchange under the same ticker symbol 'LITB' after the ADS ratio change.

What happens to fractional ADSs in LightInTheBox's (LITB) ratio change?

Fractional new ADSs will not be issued. Instead, fractional entitlements will be aggregated and sold by the depositary bank, with net cash proceeds distributed to applicable ADS holders.