Arrival shares fall 14% due to a reverse stock split 🚙
A rollercoaster week: It’s been quite the week for British electric vehicle startup Arrival. The troubled company’s shares initially went up after they announced a merger with investment firm Kensington Capital. But just a day later, the share price fell a hefty 14% as Arrival announced a ‘reverse stock split’.
1-for-50 split: A reverse stock split is when a company reduces the number of shares owned by each shareholder and increases the value of each share. For instance, if someone owned 50 Arrival shares, they’ll now own 1 share (the overall value remains the same, but the amount of shares changes).
Nasdaq’s needs: The Nasdaq stock exchange requires a company to have a minimum share price (usually around $1). Arrival stock is currently under this price thanks to ongoing cash problems, meaning it’s in danger of losing its listing on the Nasdaq, which would result in a serious loss of investment. That’s why it's been forced to undergo a reverse split.
Moderna slips 6% as it delays flu vaccine rollout 💉
Not enough flu: The biotech giant announced its latest flu vaccine (which according to early trials could be more effective than the current licensed vaccine) would be delayed due to not having enough participants with flu in a late-stage trial. As a result, Moderna will have to continue the trial.
Unimpressed investors: Until the trial is successfully completed, Moderna can’t sell its vaccine to the likes of international governments. Of course, this leaves investors less than impressed.
A long term positive outlook: Moderna has said its vaccine is outperforming the licensed flu shot when targeting ‘strain A’ versions of flu during a phase 3 study. The company expects up to $15 billion in vaccine sales in 2027, but are investors expecting the same? Time will tell.
Micron Technology gains 8% thanks to a Samsung step back 💾
Another chip bites the dust: Memory chip manufacturer Micron Technology has just seen one of its main competitors walk away from the market.
Samsung cuts chip production: After estimating a 96% drop in its operating profit, Samsung announced that it plans to cut memory chip production. Wall Street analysts believe Micron could be in heavy demand, as customers of Samsung will need a new supplier.
Post Covid lull: Demand for memory chips boomed during Covid, as consumers bought new electronics to use at home. But many manufacturers are now struggling to find a balance between their stock levels and current demand. Can Micron be the one to get it right? Investors will be hoping so.
What have we learnt this week? 🤓
A reverse stock split is often seen as a bad thing: A reverse split often signals a company is in financial trouble, hence a loss of investor confidence for Arrival.
Biotech giants often rely on governments for income: Although a government is a pretty safe customer to have, it won’t purchase anything until every ‘i’ is dotted, and every ‘t’ is crossed. Investors will want to see Moderna finish this trial quickly.
Competition can cause a stock’s price to change: Micron Technology hasn’t done anything notable this week, yet its stock surged 8%. Sometimes, news from a competitor can affect a share price, and in this case, Micron will be happy it did.
*Figures correct as of April 12th 2023.
Past performance does not guarantee future results. Capital at risk when investing.
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