vTv Therapeutics (NASDAQ: VTVT) (FRA: 5VT) stock should jump 4,000% today. This 40x rise in VTVT stock is not the result of some miracle turnaround of the business. Instead this is a purely technical move to solve one specific problem. This is also a change purely in the nominal price of the stock, not a real price move. As such no wallets will be fattened - or drained, of course. Certain markets have certain rules about who can be listed and how - this move is to retain one such listing through this move.
The business line itself: “ vTv Therapeutics Inc., a clinical-stage biopharmaceutical company, focuses on the development of orally administered treatments for diabetes. The company’s lead drug candidate is TTP399, an orally administered, small molecule, and liver-selective glucokinase activator for the treatment of type 1 diabetes; and HPP737, an orally administered non-CNS penetrant phosphodiesterase type 4 (PDE4) inhibitor that addresses inflammatory diseases and psoriasis. It is also involved in the clinical development of other programs, including TTP273, an oral small molecule GLP-1 receptor agonist for postprandial glucose excursion to treat cystic fibrosis related diabetes;...” and so on. It’s not that this is necessarily being done badly, or that it won’t work in the end. It’s that it isn’t working as yet - or hasn’t perhaps. Thus the stock price is not doing well.
vTv Therapeutics stock price from Google Finance
The problem with this is that there are rules. One of which is that the main New York markets don’t like penny stocks. It’s not that they are pits of iniquity and fraud, it’s that if there is iniquity in the markets it tends to be with penny stocks. Therefore Nasdaq runs with a $1 minimum bid price. If you can’t meet that over time then you’ve got to do something. Often enough that something is a purely technical move. Simply declare that 40 old shares are now one new one - a one for 40 reverse stock split: “vTv Therapeutics, Inc. (VTVT) will effect a one-for-forty (1-40) reverse split of its Class A Common Stock. The reverse stock split will become effective on Tuesday, November 21, 2023.”
This works because it doesn’t change the market capitalisation of the company but does change the number of shares that make it up. So, the stock price reacts mechanically - up 4,000%, or 40x. That then solves that Nasdaq listing problem. Sure, this leaves all the other problems extant, but it solves that specific one.