Heliogen (NYSE: HLGN) stock should rise 3,500% at the open this morning. HLGN stock itself is not, actually, going to be worth 35x as a result of some capitalist miracle. Rather, we have a technical change here which means that the nominal price of each piece of stock is going to rise. Other things being equal the market capitalisation of Heliogen won’t change at all - just the number of shares that makes it up. Therefore the price of each piece of stock changes.
As to what’s done at Heliogen: “Heliogen, Inc., a renewable energy technology company, operates in decarbonizing industry with concentrated sunlight. It is developing a solar solution utilizing computer vision software to align an array of mirrors, reflecting sunlight to a target on the top of a tower. Its artificial intelligence enabled modular system delivers renewable energy in the form of heat, power, or hydrogen fuel. The company’s solutions include HelioHeat, a carbon-free, ultra-high temperature heat to power heavy industrial processes, including the making of cement, steel, and petrochemicals;” It’s a fascinating idea and it’s had the backing of Bill Gates. It’s even true that we’d all like it to work as well.
The thing is that, financially at least, it doesn’t work as yet.
Heliogen stock price from Google Finance.
Not doing well financially is what produces that stock price chart above. And that, in itself, leads to a technical problem. The New York markets have this fashion - culture maybe - that penny stocks are not quite the thing. Not that all penny stocks are manipulated, but that stocks which are manipulated tend to be penny stocks. So, there’s a $1 minimum bid price on the NYSE.
At 18 cents Heliogen stock therefore has a problem - they’re at risk of losing the listing. As they’re undoubtedly going to need more capital they’d prefer to keep it. Obviously, the reason to be on a major stock market is to be able to access new capital. Something must be done and that something is to simply declare that 35 old shares are now one new one - a reverse stock split: “Heliogen, Inc. (“Heliogen”) (NYSE: HLGN), a leading provider of AI-enabled concentrating solar energy technology, announced today that its Board of Directors has approved a 1-for-35 reverse stock split (“Reverse Stock Split”) of Heliogen’s common stock.”And that’s it. A purely technical move in the Heliogen stock price. There’re 1/35th as many pieces of stock in existence today. So, the stock price rises, mechanically, by 35x or 3,500%. Getting the solar furnace to work, profitably, might take a little more work. We’ve talked more about the background of Heliogen in the past.
