Mind Technology (NASDAQ: MIND) stock should rise 1,000% at the open today. This is not because the security business has suddenly become more profitable - it’s because they’re making a technical move to solve a technical problem. That problem could/would see them kicked off the Nasdaq exchange and relegated to the OTC markets. A problem that’s worth doing something about and so they’re doing something about it.
As to the main businessline: “MIND Technology, Inc., together with its subsidiaries, provides technology to the oceanographic, hydrographic, defense, seismic, and maritime security industries. It operates in two segments, Seamap Marine Products and Klein Marine Products. The company’s products include the GunLink seismic source acquisition and control systems that provide operators of marine seismic surveys with precise monitoring and control of energy sources; the BuoyLink RGPS tracking system, which is used to offer precise positioning of marine seismic energy sources and streamers” and so on. That description is a little out of date as they recently sold the Klein Marine business for $11.5 million.
Mind Technologies stock price from Google Finance
The specific problem that requires attention here is a byproduct of that falling MIND stock price. It’s not that there’s anything wrong with a penny stock in an objective sense. It’s just that the culture of the New York markets seems to think that they’re not quite right. Not that every penny stock hides a fraud or a charlatan but when a charlatan does try a fraud it seems to be in a penny stock. So, the main exchanges - NYSE and Nasdaq - have a $1 minimum bid rule. If you become a penny stock, as above, then you’ve got to do something about it or you cannot be on the main markets.
The what to do about it is easy enough, just declare that 10 old shares are now one new one, a one for 10 reverse stock split: “MIND Technology, Inc. ("MIND" or the "Company") (Nasdaq: MIND) announced today that its Board of Directors (the "Board") have authorized a reverse stock split for its common stock, $0.01 par value per share, at a ratio of 1-for-10 to be effective October 13, 2023.”
This doesn’t change, not directly it doesn’t, the market capitalisation of the company as a whole, just the number of shares that make it up. The stock price therefore reacts mechanically, rising by 1,000% or 10x.
Thus is the Nasdaq problem solved but it’s by changing the nominal price. Changing the real price will require that much more difficult task of sorting out the business itself.