Infobird (NASDAQ: IFBD) stock should rise 2,000% today. This 20x rise in IFBD stock is not the result of their finally getting the business together - it’s a purely nominal and technical rise. It’s also the second time just this year that they’ve used the same tactic. Which means that the tactic is less than effective at sorting out what ails the business of course. Sure, it solves the specific problem - the nominal stock price - which is being directly addressed. But not the more basic problems of the business itself.
That business is: “Infobird Co., Ltd, through its subsidiaries, operates as a software-as-a-service (SaaS) provider of artificial intelligence (AI) enabled customer engagement solutions in the People’s Republic of China. The company offers customer relationship management cloud-based services, such as SaaS and business process outsourcing services to its clients. It also provides AI-powered cloud-based sales force management software, including intelligent quality inspection and intelligent training software to enable its clients to monitor, benchmark, and enhance the performances of agents; consumer product and retail store digitalization solutions; and other services, including software license selling, data analysis, and other professional services.” We might put that as Infobird runs chatbots.
Sadly, it doesn’t run them very well - or at least not very profitably. Which leads to this.
Infobird stock price from Google Finance
Nasdaq has a rule - the $1 minimum bid. It’s just felt that penny stocks aren’t quite right - so, if you’re a penny stock you’ve got to do something about it. That something is usually just declare that 20 old shares are now on new one, a one for twenty reverse stock split: “Infobird Co., Ltd (IFBD) will effect a one-for-twenty (1-20) reverse split and par value change of its Ordinary Shares. The reverse stock split and par value change from 0.025 to 0.50 will become effective on Monday, November 20, 2023.” This doesn’t change the market capitalisation of the firm, just the number of shares that make that up. So the stock price reacts mechanically, rising 2,000% or 20x.
That solves that Nasdaq $1 minimum bid price problem. Well, solves it for a time that is. Because Infobird did this a few months back as well, a one for five reverse split in May. If you’ve got to, repeatedly, multiply the nominal stock price via capital redenomination then there’s a serious and significant problem with the real stock price, isn’t there? And, likely enough, with the underlying business.
