Eros STX Global Corporation (ESGC) plunged in the after-hours when the company announced that its Board of Directors had approved the reverse stock split of its common stock. ESGC values at $0.22, losing more than 23% from the previously closed value. The stock closed at $0.29 in the previous trading session. The stock volume traded in the last trading session was around 7.46 million shares.
The reverse stock split of ESGC common stock
The Board of Directors of Eros STX Global Corporation (ESGC) approved a one-for-twenty reverse stock split of its existing A and B ordinary shares. It will take effect at 5:00 p.m. Eastern Time on February 7, 2022, and the Company’s A common shares will trade post-split on February 8, 2022.
ESGC’s A common shares will keep trading on the NYSE under the ticker ESGC. The Reverse Stock Split expects to enhance the market price per share of the Company’s ordinary shares. The aim is to recover compliance with the NYSE’s minimum trading price criteria.
It reduces A ordinary shares from 357.3 million to 17.9 million, and B common stock shares from 21.7 million to 1.1 million. The Reverse Stock Split will not affect the common shares’ rights or preferences but will adjust the par value per share proportionally.
The Reverse Stock Split will not issue fractional shares. A reverse split happens when the intraday volume-weighted average price (VWAP) for the Company’s A ordinary shares on the NYSE for five trading days preceding the Effective Date averages over a fraction of one share. Computershare Trust Company will serve as the reverse stock split’s exchange broker.
The effect of Reverse Stock Split on the ESGC stock
Eros STX Global Corporation (ESGC) was down as soon as the news got public. The company was expecting that the reverse stock split would help them regain value to meet the compliance with NYSE. But the decision to reverse stock backfired. Most of the traders trade in the regular session, due to which the stock is volatile in the after-hours.
Conclusion
Eros STX Global Corporation (ESGC) stock is on edge. The company is trying hard to meet the compliance with NYSE or it effects its continuation of listing in the market,
