Foxo Technologies (NYSE: FOXO) stock should jump 1,000% today. The cause is a reasonably well known move, one designed to solve a specific problem. What confuses us about this is that this won’t, in fact, solve the specific problem with FOXO stock. So, why go to the effort of not solving the problem? And that is the pity here, for a 10x rise in FOXO stock doesn’t, in fact, solve the problem being addressed.
The business line: “FOXO Technologies Inc. engages in epigenetic biomarker underwriting technology and consumer engagement platform service business in the United States. It operates through two segments, FOXO Labs and FOXO Life. The company applies automated machine learning and artificial intelligence technologies to discover epigenetic biomarkers of human health, wellness, and aging.” Well, could work well, might not. Perfectly respectable line of business but it depends upon the execution.
Which doesn’t seem to be so good from the accounts. They’re running on fumes. Cash is hugely lower than accounts payable, for example. Not a great sign. Looses are large and ongoing. Without any other knowledge, just from those accounts, we’ed suggest that a capital raising is due real soon now. However, that’s not the specific problem to be solved today.
The specific problem is that to remain on the NYSE you need to have a stock price above the $1 minimum. Which, clearly enough, they don’t. This is easy enough, just declare that 10 old shares are now one new one. A one for 10 reverse stock split: has approved a 1-for-10 reverse stock split of the Company’s Class A common stock, par value $0.0001 (the “Common Stock”). The reverse stock split will become effective at 4:01pm ET on November 6, 2023. The Common Stock is expected to begin trading on a split-adjusted basis on the NYSE American under the same symbol “FOXO” when the market opens on November 7, 2023,”
This doesn’t change the valuation of the company, just the number of shares that make it up. Thus the stock price reacts mechanically, rising 10x or 1,000%. But as we can see this doesn’t actually solve the problem. Assuming that we do just get the mechanical reaction then the stock might rise to about 60 cents. Which doesn’t beat the $1 minimum. So, it’s difficult to see why Foxo Tech has bothered with this. Or perhaps they were just hoping that the recent stock price performance would have been a little better?