Shiftpixy (NASDAQ: PIXY) stock is up some 75% yesterday and premarket. PIXY stock is rising because the company has announced a reverse stock split. Which, well, yes, a reverse - a consolidation to Brits - is supposed to add value to a company. But 75% merely on the announcement that this entirely technical operation is going to be undertaken? We might think that that’s a tad excessive. In fact we, we do think that’s a tad excessive.
The announcement: “ShiftPixy, Inc. (Nasdaq: PIXY) (“ShiftPixy” or the “Company”), a Florida-based national staffing enterprise which designs, manages, and sells access to a disruptive, revolutionary platform that facilitates employment in the rapidly growing Gig Economy, today announced that at 11:59:59 p.m. on September 30, 2023, in Wyoming, pursuant to the vote of its shareholders on August 21, 2023, to effect a one-for-twenty-four (1:24) reverse split of the Company’s issued and outstanding shares of Common Stock, as further detailed in the Company’s definitive Schedule 14C Information Statement filed on September 1, 2023, Articles of Amendment of the Company’s Amended and Restated Articles of Incorporation will become effective as filed with the Secretary of State of Wyoming. The new reversed shares will begin trading on Nasdaq on October 2, 2023.”
Now, yes, Shiftpixy risks being thrown off Nasdaq for being under the $1 minimum bid price. So, remaining on Nasdaq - something that does add value, being on a more liquid exchange - is a decent goal. The reverse stock split doesn’t change the value of the company, not directly, just the number of shares that make it up. Therefore the stock price should, on Oct 2, jump 24x, or 2,400%. As we say, remaining on Nasdaq is value additive - but we’d raise an eyebrow at it being 75% of market capitalisation additive.
Shiftpixy stock price from Google Finance
We’ve looked before at Shiftpixy: “ShiftPixy (NASDAQ: PIXY) is a stock that's been around for a bit. It's also a company that hasn't been - so far at least - able to capitalise upon its opportunities. As was pointed out elsewhere: “ShiftPixy itself is one of those ideas that might have come off but it appears that it didn't. It's an app and system aiding gig work in the restaurant world. Sure, we all know about gig work and Deliveroo and Uber, and the rest. But restaurant work does have quite a flow of staff through jobs over time. There are large changes in demand so flexibility in the workforce both happens and is desired. We can imagine that restauranteurs might be keen to sign up to a system that offers a pool of workers than can be matched to that changing demand.” Well, yes, OK, that could have happened but it didn't. So, bad idea then. There was also that spin off of AXH on the grounds that not to do so might leave PIXY classified as an investment company.”
That the Shiftpixy CEO also has a habit of talking about dastardly short sellers trying to do him down less than impresses us. Wee take that as an infallible sign of not understanding stock markets.
We would be surprised to see this price jump being maintained. Sure, a reverse stock split is supposed to add value, that’s what it’s for. But this much? Seems too much to us.
