Ideanomics (NASDAQ: IDEX) stock should rise 12,500% at the open. IDEX stock’s 125x rise is not, sadly the company finally getting things right. It is, instead, a defensive and technical move meant to ensure the continuation of the NASDAQ quote. It doesn’t make up for the past performance of the stock price at all.
As to what Ideanomics does: “Ideanomics, Inc., through its subsidiaries, develops zero emission mobility solutions for the off-highway and on-highway commercial vehicle markets in Asia, Europe, and the United States. The company’s Ideanomics Mobility business unit focuses on the commercial adoption of electric vehicles (EV) by commercial fleet operators. This business unit provides solutions for the procurement, financing, charging, and energy management needs for the fleet operators of commercial EVs; and zero emission mobility solutions, such as the provision of commercial electric vans, trucks, buses, electric tractors, and two-wheeled transportation” Everything EV that is. Unfortunately, it doesn’t do it very well. That not very well being the reason for the decline in the stock price.
Ideanomics stock price from Google Finance
Sure, Ideanomics has other problems too but that stock price on its own is one. Nasdaq has a $1 minimum bid requirement. Fall below that price for long enough and you lose the market quote. That’s a problem because it makes raising new capital much more difficult - raising new capital being something Ideanomics might well need to do.
So, something must be done, that something is to declare that 125 old shares are one new one. A one for 125 reverse stock split: “Ideanomics, Inc. (IDEX) will effect a one-for-one hundred twenty five (1-125) reverse split of its Common Stock. The reverse stock split will become effective on Friday, August 25, 2023.”
This doesn’t change the valuation of the company, nor of any individual stake. It just changes the number of shares that make them up. Therefore the stock price changes, mechanically, in the same ratio - up 12,500%, or 125x.
The reason for all of this is merely custom, or even fashion, on the New York markets. Penny stocks are felt to be the home of the charlatans and frauds. Not that all penny stocks are manipulated, but the manipulated stocks tend to be penny ones. So, that $1 minimum bid price on the major NY exchanges. Shrug, their markets, we’ve all got to play by their rules on them.
