MIAMI, FL – MSP Recovery, Inc. (NASDAQ:LIFW), a company specializing in computer processing and data preparation, has announced a significant change to its stock structure. In a recent SEC filing, the company disclosed that its Board of Directors has been authorized to implement a reverse stock split of its common stock.
The decision was made through a written consent by the majority stockholders, who hold over 79% of the combined issued and outstanding shares. This action allows the board to execute a reverse stock split at a ratio ranging from 1:3 to 1:30, at its discretion. The exact timing and specific ratio are yet to be determined by the board.
This strategic move comes as MSP Recovery aims to adjust its capital structure. The reverse stock split will reduce the number of shares outstanding, potentially increasing the per-share market price. This can often make the stock more appealing to a broader range of investors and may help the company meet certain listing requirements.
The filing, dated September 25, 2024, and signed off on September 27, 2024, by General Counsel Alexandra Plasencia, does not specify the reasons behind the reverse stock split. However, such measures are typically taken by companies seeking to optimize their stock's marketability and compliance with trading platforms' standards.
Investors in MSP Recovery should monitor the company's communications for the announcement of the specific details regarding the reverse stock split. It is important to note that while a reverse stock split reduces the number of shares an investor holds, it does not inherently change the value of the company or the total value of an individual's investment.
In other recent news, MSP Recovery has secured a significant agreement modification with Virage Recovery Master LP, effectively waiving a clause that would have expedited payment under certain conditions. This development offers MSP Recovery increased flexibility in financial management. Simultaneously, the company issued a substantial number of shares to investment firm Yorkville, as part of a broader strategy to finance MSP Recovery's growth.
Furthermore, LifeWallet, affiliated with MSP Recovery, achieved a comprehensive settlement with a group of property and casualty insurers, streamlining the recovery process and enhancing claims reconciliation capabilities. In addition, LifeWallet has completed the first version of its clearinghouse solution, developed in partnership with Palantir Technologies (NYSE:PLTR), aimed at improving the efficiency of identifying and recovering owed payments.
InvestingPro Insights
MSP Recovery's decision to implement a reverse stock split comes at a critical time for the company, as revealed by recent InvestingPro data. The company's stock has experienced significant declines, with a 1-year price total return of -97.3% and a year-to-date return of -93.39%. This context underscores the urgency of the company's efforts to adjust its capital structure and potentially improve its stock's marketability.
InvestingPro Tips highlight that MSP Recovery is currently trading at a low Price / Book multiple of 0.08, which could be seen as an attractive valuation for some investors. However, it's crucial to note that the company is not profitable over the last twelve months, with a negative operating income of -543.85M USD for the same period.
These insights provide additional context to the company's decision to pursue a reverse stock split, as it may be an attempt to address the stock's poor performance and improve its appeal to investors. For those interested in a deeper analysis, InvestingPro offers 18 additional tips for MSP Recovery, providing a more comprehensive view of the company's financial health and market position.
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