VivoPower (NASDAQ: VVPR) stock should jump 1,000% at the open today. VIVO stock rising 10x is not because they’ve just discovered the secret of making money - this is a purely technical change in price, a nominal not real one. Such things do happen and often enough for the same reason as this one - fashion on the stock market. Or, perhaps better, because of the culture on that stock market.
What’s done at the company: “VivoPower International PLC, together with its subsidiaries, operates as a sustainable energy solutions company in Australia, Canada, the Netherlands, the United Kingdom, the United States, the Philippines, and the United Arab Emirates. It operates through Critical Power Services, Electric Vehicles, Sustainable Energy Solutions, and Solar Development segments. The Critical Power Services segment offers energy infrastructure generation and distribution solutions, including the design, supply, installation, and maintenance of power and control systems to a range of government, commercial, and industrial customers.” And why not? One answer to that being that they’re not making money at it. The stock’s down from its $15 and $17 peaks in 2021 and now that it’s well under $1 and has been for some time that’s a problem.
Vivopower stock price from Google Finance
That problem being that fashion, that culture, on the market. The American markets think that penny stocks are not quite right. Not that all penny stocks are frauds, but where there are frauds they tend to be in penny stocks. Therefore, you cannot be a penny stock for long (abut 18 months) and remain on Nasdaq. You get relegated to the OTC with less liquidity and much greater difficulty in raising new capital. So, if you are a penny stock then something needs to be done.
That something is to declare 10 old shares to be one new one - a one for 10 reverse stock split: “VivoPower International PLC (VVPR) will effect a one-for-ten (1-10) reverse split and par value change of its Ordinary Shares. The reverse stock split and par value change from $0.012 to $0.12 will become effective on Friday, October 6, 2023.” This doesn’t change - not directly - the market capitalisation of the company, just the number of shares that make it up. Therefore there’s a mechanical reaction from the stock price, up 1,000% or 10x.
The Nasdaq quote and listing is saved and Huzzah, obviously. Now all that needs to be done is to grow the business into being able to support it’s own costs - start making a profit that is. Which is one of those more difficult and less technical things.
