Shapeways Holdings (NYSE: SHPW) should rise 800%, or eight times, at the opening this morning. This is a purely nominal change, something being done just to preserve that listing on the NYSE. It won't, directly, make any difference to the valuation of the company nor of any individual shareholding in it.
The actual business Shapeways is in seems like a pretty good idea. 3D printing is clearly a part of that white hot heat of technology and there's absolutely no doubt at all in anyone's mind that the base idea is going to find ever greater uses. SHPW also seems to be at least trying to go about it the right way. They both offer equipment for people to 3D print themselves and also offer contract services all in a number of different materials. The concept clearly works at the theoretical level.
Sadly, rather less so at the practical level. The last accounts seem to show losses at the same sort of level as sales revenue. $8.2 million in revenue, $7.7 million in losses for the quarter. In financial terms it's that there's not enough trade volume to cover the overheads of the operation. The actual work has a positive gross margin, but there's not enough of it.
Shapeways Holdings stock price from NASDAQ
It's that non-profitability that feeds through into the current problem. Losses do, after all, tend to lower a stock price. Rather a lot in Shapeways case. Down 61% in the last 12 months and a 95% loss since the SPAC arrival on the markets back in 2021. Well, OK, poor shareholders and Boo Hoo, right?
Except the NYSE has standards. And the American markets have a belief that a penny stock is not respectable. That's where all the charlatans and fraudsters go. So, there's this $1 minimum bid price - be below that for long enough and you lose your listing on the NYSE.
There is a solution to this, the reverse stock split. Simply declare that what were 8 shares yesterday are now one today. Just what Shapeways has just done, an 8 for 1 reverse stock split. The price should mechanically rise by 800%, or eight times, thereby saving that NYSE quote.
This has no direct impact upon the market capitalisation, perhaps a slight boost in a sigh of relief at retaining the major market quote. Or, as sometimes does happen, the liquidity leads to greater selling.
The real point here is that this 800% price move is a purely nominal one and the real price change will be however much SHPW changes other than 800%.
