AuthID (NASDAQ: AUID) stock will rise 800% at the open. AUID stock here is an interesting example of that old adage, buy the rumour, sell the fact. Or, perhaps, a proof of the efficient market hypothesis. AuthID is solving a specific problem here. The stock price has risen upon the news that it will solve that problem. The actual price action on solving it, well, that might be nothing at all. Showing us that the information that the problem will be solved is incorporated into prices before it actually is solved. Or, another way to put this, markets move prices on what is going to happen, not what actually does.
AuthID used to be Ipsidy, with an uplisting to NASDAQ in 2021. The peak stock price was some $17 and change at the end of 2021. It's been rather downhill since then to the current price of around $0.90. A 61% loss in the past 12 months in fact. The business line is: “ authID Inc. provides secure, biometric, identity verification, and strong passwordless and biometric authentication for consumer and workforce applications worldwide. The company offers solutions through its Verified platform to enable their users to easily verify and authenticate their identity through a mobile device or desktop.” We'd think that's a good line to be in perhaps but the financial performance has not been great.
AuthID stock price from NASDAQ
The problem is that plunging stock price. As we can see from the chart above, NASDAQ has AUID as “out of compliance”. The American markets think that penny stocks are somehow not quite right. Having a price under $1 carries with it connotations of OTC stocks, and manipulators like Wolf of Wall Street and so on. So, NASDAQ and the NYSE insist that a stock must have a minimum bid price of $1. Fail that test and you are, as AUID is listed as being, out of compliance. Something must be done.
The something is to have a reverse stock split. Simply declare that what used to be 8 shares will not be one - a 1 for 8 reverse stock split. Exactly what authID is doing as of today. Purely mechanically the stock price should this rise 8x, or 800%. For the value of the corporation doesn't change, only the number of shares that make it up.
Or perhaps the market capitalisation doesn't change directly. It can - and often will - indirectly. There's that problem of being out of compliance, if that continues then the NASDAQ quotation will be lost. So, announcing that the problem will be solved produces that 10% boost in the AUID stock price. Note that it's when the solution is announced, not when it actually happens. Stock markets do move prices around during time.
