Ryvyl (NASDAQ: RVYL) stock should be up 1,000% today. RVYL stock should have risen that 10x as a result of a purely technical move. It should have been a very simple and nominal price change. There’s also something very weird going on here for this nominal and technical change seems to have led to a collapse in the real stock price. This is one of those things that really just shouldn’t happen. Unless there’s some other piece of news that no one’s quite sure about.
So, what happens at Ryvyl: “Ryvyl Inc., a technology company, engages in the development, marketing, and sale of blockchain-based payment solutions. The company’s blockchain-based systems facilitate, record, and store a volume of tokenized assets representing cash or data on a blockchain-based ledger. Its products include QuickCard Payment System, a physical and virtual payment card processing management system, including software that facilitates on and off ramp e-wallet management; point of sale solutions comprising software and hardware; and Coyni, a digital currency platform” Well, OK, yes, we can see they’re going to have problems. That’s very last year that is, not this year’s fashion at all.
But this stock price move is absurd:
Ryvyl stock price from Google Finance
So, management was worried about breaching the $1 minimum bid pricing requirement to keep the Nasaq quote. So, have a reverse stock split. The nominal price should rise ,000%, or 10x. Pretty standard move of no great importance: “Shares of Ryvyl fell sharply Wednesday after the company announced a 1-for-10 reverse stock split. The stock was down 38% to 69 cents in afternoon trading.”
Eh? Why a 40% fall on the announcement of this relatively routine move? No, we don’t know either. The effect through is obvious enough - only half of that nominal stock price change has made it through - the other half has been lost in a real price fall.
Just for funsies, it’s possible to construct a reason here. This would be very extreme and possibly entirely an invention of ours so don’t take it too seriously. But this: “every 10 issued and outstanding shares of the Company’s Common Stock will be converted automatically into one share of the Company’s Common Stock without any change in the par value per share. Once effective, the reverse stock split will reduce the number of shares of Common Stock outstanding from approximately 52.4 million shares to approximately 5.24 million.”
If they don’t change the par value then the earlier, or previous, authorisation to issue stock will still be valid (no, we don’t know the law well enough to know if that’s true but we can imagine it being so). Which means they’ve authorisation to issue up to 45 million new shares. Yes, we could see that could depress a stock price.
