Bionano Genomics (NASDAQ: BNGO) stock will jump 1,000% at the open this morning. BNGO stock rising 10x is not, sadly, to make up for the decline in the value of the past few years. Rather, it’s to make up for one of the effects of the decline in value over the past few years. This is a different thing as what we’re going to have is a change in the number of shares in issue and so a change in the nominal price of each share. Not a change in the real value of the company and thus a change in the real value of any holding in it.
As to what goes on at Bionano: “Bionano Genomics, Inc. provides genome analysis software that enables genomics labs to analyze and interpret data across a range of platforms to generate informative data visualizations for streamlined and simple reporting of causal variants. It offers Saphyr, a sample-to-result solution for structural variation analysis by optical genome mapping for genome analysis and understanding of genetic variation and function” and so on. It’s a supplier into the research and development end of the pharma and biologics business that is.
One read - and it is only one read - on Bionano is that it’s very good at what it does but that the marketplace for that thing is too small to support the costs of the company. Fortunately, for our purposes here, we don’t need to concentrate on that. The financial results have been sufficiently bad that the stock has declined 80% and more over the past 12 months. That causes a problem that must be solved - today’s actions are that solution.
Bionano Genomics stock price from Google Finance
The US stocks markets have this cultural thing - below $1 is not just a penny stock, it’s also disreputable. So, to remain on the main markets the price must remain above the $1 minimum bid price. Bionano is violating this provision so something must be done. The something is a reverse stock split. 10 of the old shares are now just one of the new. All purely a mechanical change of course but it does mean that the nominal price rises by that 10x, or that 1,000%. Bionano’s reverse split takes effect this morning. Other than that this saves the NASDAQ quote a listing there’s really nothing else to it. Everyone has fewer shares, each share is worth more - and that’s it.