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Or be delisted! The share price of a new force plummeted.

2024-07-14 Update From: AutoBeta NAV: AutoBeta > News >


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On Feb. 16, American electric car startup Fisker (Fisk) said it had received a notice of non-compliance from the New York Stock Exchange because its share price closed below $1 per share for 30 consecutive trading days, and companies that did not comply with NYSE rules could be delisted, and the company would usually return to the minimum price requirement through a reverse split. Fisker said the notice would not cause it to delist from the stock exchange immediately and would have six months to restore compliance.

Data show that Fisker Automotive was founded by Henrik Fisker, Henrik Fisker is a well-known designer in the automotive industry, has worked in BMW, Ford and other automobile companies, BMW Z8, Aston Martin DB9 and so on, he also participated in the pre-design of Tesla Model S, so he was confused with Tesla. In 2008, Tesla sued Fisker, accusing him of plagiarizing Tesla's technology for his Fisker Karma model, but the lawsuit ended in Tesla's defeat, paying Fisker more than $1.1 million in legal fees.

At the 2010 Shanghai Auto Show, the Fisker Karma announced a pre-price of 1.6 million yuan. It is equipped with a hybrid system of 2.0T gasoline engine and electric motor, with a maximum power of 402hp, a maximum torque of 1300N ·m and a fuel consumption of less than 2.4L per hundred kilometers. Of course, such a high price is destined to be difficult for it to develop in the domestic market. In 2014, Wanxiang Group acquired Fisker Automotive, including the technical design rights of Fisker Karma and the production equipment of Fisker in Delaware, but Henrik Fisker retained the trademark and brand name of Fisker. In 2016, Henrik Fisker regained its strength and announced the establishment of Fisker Inc. The new company will focus on the development and manufacture of pure electric vehicles with self-driving, beautiful and Internet-connected functions.

In July 2020, Fisker Inc completed $50 million in round C financing. In October 2020, Fisker Inc successfully landed on Nasdaq through a reverse takeover under the symbol FSR, and its share price rose 13% to $10.14 on the day of listing. However, as of press time, Fisker shares have fallen to $0.7312, with a total market capitalization of only $392 million, and the company has traded below $1 for 30 consecutive trading days, so it does not meet Nasdaq trading standards.

According to Fisker, it will return to the minimum share price requirement through a reverse split. Reverse split is a special way of stock split, which involves reducing the number of shares already issued by the company, rather than increasing the face value of the shares like the ordinary stock division. In this case, the proportion of shares held by shareholders remains unchanged, which means that shareholders have not lost any share value. On the contrary, as the number of shares decreases, the real value of each share will increase, which may stimulate the share price to rise.

The purpose of reverse split is to enable the company's share price to meet the exchange's rigid requirements for the lowest price and to prevent delisting because the stock price is too low. In this way, companies can raise their stock prices, enhance their market image, attract more investors, and may also increase trading volume and liquidity. A reverse split does not change the total market capitalization of the company. Once the reverse split is completed, most of the original shareholders will find that the number of shares they hold has decreased, but the value per share has actually increased. To sum up, the main advantage of reverse split is that it can help companies avoid delisting because the share price is too low, at the same time, it is possible to increase the share price, increase trading volume and liquidity, and attract more investors to participate.

Prior to this, another new power company, Faraday, also had a share price of less than US $1 in the future, which was much lower than the Nasdaq listing standard, so the company carried out a reverse equity division of the company's issued common shares. The implementation ratio is between 1:2 and 1:90, making its share price return to more than $1, thus meeting the Nasdaq listing requirements. Faraday's future share price rose to $22.00 after the partnership. However, Faraday's future share price has fallen below $1 to $0.0937, plunging 99% in just 30 trading days, with a total market capitalization of only $11.9953 million, the lowest since Faraday's future IPO went public.

Generally speaking, Faraday's future is not a mirror of Fisker. Although it can return its share price to more than $1 by reverse split, it is not impossible for Fisker to fall back below $1 if it lacks imagination for the future and sufficient market competitiveness.

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