Ucommune (NASDAQ: UK) stock jumped 45% yesterday - of course, UK stock then also fell back after hours as some of that exuberance fled. But the cause of the rise does seem to be simply that the stock price should rise 1,200% today. Which is, you know, odd. For the 45% rise was a rise in the real price - that added to wallets. But today’s rise. The 1,200%, will be entirely nominal. A real price rise ahead or a real price rise makes great logical sense, a real one ahead of a nominal perhaps not so much.
The business line: “Ucommune International Ltd manages and provides agile office spaces in China. It operates self-operated and asset-light models. The company also provides individual services, such as catering, fitness, healthcare, training, and entertainment; general corporate services, such as corporate secretary, human resources, legal, finance, IT support, and tax services; incubation and corporate venturing services; design and build services; advertising and branding services; and related services. It serves individuals and enterprises.” Or, as everyone else calls it, “China’s WeWork”. And it’s been about as exciting as well. Both up and down.
Ucommune stock price from Google Finance
That stock price performance means that Ucommune is at risk of losing the Nasdaq listing. It’s not that penny stocks are actively bad, it’s just that the markets think they’re not quite right. Perhaps, not to be allowed to sit with the grownups. So, long term penny stocks get kicked off the main markets and relegated to the OTC.
There’s a solution to this, simply declare that 12 old shares are now one new one, a one for 12 reverse stock split: “Ucommune International Ltd (UK) will effect a one-for-twelve (1-12) reverse split of its Ordinary Share. The reverse stock split and par value change from 0.002 to 0.024 will become effective on Thursday, November 30, 2023.”
OK, that doesn’t change the value of the company, just the number of shares that make it up - so the share price reacts mechanically, up 1,200%. Job done, Nasdaq listing saved.
All we need to work out now is, well, why did the real price rise 45% just on the announcement that this would happen?
