Troika Media (NASDAQ: TRKA) hasn't exactly pleased stockholders this past 12 months as they've lost 88% of their money on the plummeting price. On the other hand it'll rise 2,500 %, or 25x, at open today - which might please some but we should note that it's a purely nominal price rise. There's a slight amusement in that Troika actually announced that it was solving, in the best way possible, a looming problem and yet still the stock price - the real price - dropped 17% as a result. Maybe the assumption is that while one problem has been solved others still exist?
As to what Troika does: “ a professional services company, provides consulting services and solutions worldwide. It offers brand building and activation, marketing innovation and enterprise technology, and performance and customer acquisition; and internal and external creative, technical or media-based resources,” and so on and no, we're not much the wiser about that either. Another way of describing what Troika does is it loses money: “Net loss $ (7,901)” which, just for a quarter, and on $60 million of turnover, is quite a lot. We might have the secret of the falling stock price there. Recently it spent money on buying blockchain and NFT developers - like that was the right strategic decision.
Troika Media stock price from NASDAQ
The much more immediate problem is that Troika has been below NASDAQ's $1 minimum bid price for long enough to be in danger of being delisted. The reason for this minimum price is just fashion, culture. The American markets just have this idea that penny stocks are the wort of things that get manipulated by the more evil among the financiers. Therefore you can't be on a serious exchange with a price consistently below $1. Just one of those things people believe and we do have to deal with the world as people think it is.
The solution here is a reverse stock split, a consolidation. Simply declare that what used to be 25 different pieces of stock are now just the one. A 25 for one reverse split, exactly what Troika has now done. This doesn't, directly, change the value of the company as a whole, it just changes the number of pieces of paper that make it up. Therefore each piece of paper changes in price. Here there should be a 25x, or 2,500%, rise in the value of each Troika Media share.
It doesn't actually solve any of the other problems - like having spent money on blockchain and NFT developers - but it does preserve the NASDAQ quotation. There might be some value creation from that, but given yesterday's reaction, that 17% fall, perhaps not.
