Spire Global (NYSE: SPIR) stock should rise 800% at the open this morning. SPIR jumping 8x is not, sadly, evidence of some grand turnaround in business fortunes here. Rather, it’s a technical move to deal with past failures to perform. It’s worth noting that this is a purely nominal price change, not a real one. No wallets will be made lighter or heavier by this, however necessary it is to do it.
As to what’s done at Spire: “Spire Global, Inc. provides subscription-based data, insights, predictive analytics, and related project-based services worldwide. The company offers satellite-based aircraft tracking data to power applications, drive decision making, and improve cost efficiencies; data, insights, and predictive analytics for highly accurate ship monitoring, real-time and near real-time vessel updates, port operations, ship safety and route optimization; and space-based data, AI-powered insights, and predictive weather analytics for accurate weather forecasting.” Well, OK, sounds pretty high tech and sexy really. It’s just that it’s not been done all that well.
Not doing well is why the stock price is down 58% over the past 12 months and much more than that since the peak over $15 immediately post Spac IPO back in fall 2021. Oh well, such things happen - but something does need to be done about it.
Spire Global stock price from Google Finance
The reason something has to be done is because of a fashion, possibly a culture, on the New York markets. It’s not true that all penny stocks are manipulated. But where there is stock manipulation it tends to be in penny stocks. So, the NYSE has a $1 minimum bid price. Become a penny stock and something must be done if that listing is to be maintained.
The something is simply to declare that 8 old shares become one new one - a one for eight reverse stock split: ”Spire Global, Inc. (NYSE: SPIR) (the “Company” or “Spire”) today announced that the 1-for-8 reverse stock split of the Company’s Class A and Class B common stock will become effective on August 31, 2023.”
This doesn’t change the value of the company overall, the market capitalisation. It just changes the number of shares that make that up. Which then, obviously, means that the stock price, mechanically, changes by that 800% or 8x.
That then solves the problem of keeping the NYSE quotation for Spire Global. Leaving only the problem of how to improve the business itself - something often rather harder.
