Markforged Holding Corp (NYSE:MKFG), a company specializing in computer peripheral equipment, announced a 1-for-10 reverse stock split of its common stock, effective as of the start of trading on Thursday. The move is accompanied by a reduction in the authorized shares of common stock from 1 billion to 100 million.
The reverse stock split was approved at the company's annual stockholder meeting on June 18, 2024, with the board of directors subsequently authorizing the action on August 13, 2024. The implementation began at 12:01 a.m. Eastern Time on the day of the announcement, with the stock trading under a new CUSIP number but retaining its existing ticker symbol.
As a result of the reverse split, every ten shares of Markforged common stock were automatically converted into one share. This adjustment decreased the number of outstanding shares from approximately 203 million to about 20.3 million.
The company ensured that no fractional shares were issued; stockholders who would have received a fraction of a share instead received an additional fraction to round up to a whole share.
The reverse split also necessitated proportional adjustments to Markforged's equity incentive plans, including the exercise price and the number of shares issuable upon the exercise or conversion of outstanding stock options, restricted stock units, and other equity securities. Warrants were similarly adjusted, with every ten warrants previously exercisable for one share of common stock now exercisable for one share at a revised exercise price of $115.00 per share.
Continental Stock Transfer & Trust Company is managing the exchange process for the reverse split. Stockholders who hold their shares in book-entry form will receive a transaction statement reflecting their post-split ownership and do not need to take any action.
Those holding shares through banks, brokers, or other nominees will see their holdings automatically adjusted to reflect the reverse split, subject to the policies of the holding entities.
In other recent news, Markforged Holding Corporation announced a 1-for-10 reverse stock split to meet the New York Stock Exchange's minimum bid price requirement.
The decision, approved by the Board of Directors, will reduce the total number of outstanding shares from approximately 203 million to about 20.3 million.
This move follows a decrease in the company's Q2 2024 revenue from $25.4 million to $21.7 million year-over-year, despite an improvement in gross margins to 51.9%.
The company also disclosed a $25 million cost reduction initiative, primarily targeting R&D expenses. Markforged managed to ship its first PX100 and accelerate shipments of its FX10 product, with plans for further expansion in the second half of the year. However, potential legal challenges from Continuous Composites could lead to a 5 to 7 percentage point reduction in gross margins. Despite these challenges, Markforged projects full-year revenues between $90 million and $95 million.
InvestingPro Insights
As Markforged Holding Corp (NYSE:MKFG) embarks on a significant corporate action with its 1-for-10 reverse stock split, understanding the financial health and market sentiment surrounding the company can provide investors with a clearer picture. Here are some key insights based on the latest data from InvestingPro:
The company holds a market capitalization of approximately $414.63 million, indicating its size within the computer peripheral equipment industry. Notably, Markforged boasts a high gross profit margin, standing at 48.42% for the last twelve months as of Q2 2024, which reflects strong efficiency in their production processes relative to peers. However, investors should be aware of the company's performance challenges, as indicated by a significant revenue decline of 17.17% during the same period.
From an investment standpoint, Markforged is trading at a low Price/Book multiple of 0.31, suggesting that the market may be undervaluing the company's assets relative to its share price. Additionally, the stock is currently in oversold territory according to the Relative Strength Index (RSI), which might attract investors looking for potential bargains.
InvestingPro Tips highlight that Markforged is facing a cash burn issue, as it's quickly using its available cash reserves. This is a critical factor for investors to consider, especially in the context of the reverse stock split and the company's strategic direction. Moreover, while the company holds more cash than debt, which is typically a positive sign, analysts do not expect the company to be profitable this year.
For those seeking more comprehensive analysis and additional insights, InvestingPro offers a broader range of tips on Markforged Holding Corp, which can further guide investment decisions.
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