Here’s what Aurora Cannabis shareholders need to know about the planned reverse stock split…
Aurora Cannabis Inc. (NYSE: ACB) just announced that it is conducting a 1-for-12 reverse stock split, which is currently scheduled for May 11.
The company’s shares have traded below $1 for 30 days, which puts it at risk of being delisted from the New York Stock Exchange (NYSE). If it gets delisted, it will start trading in the OTC markets.
Now, if you still own the company when the Aurora reverse stock split happens, it may appear that your shares of ACB are more valuable. But that’s not what will happen when the Aurora reverse stock split takes place.
For every 12 shares of ACB that you own right now, you will receive 1 new share after the reverse stock split. So, if you own 12 shares right now, when the reverse stock split occurs, you will receive 1 share that is priced at $9.12.
And that is where it’s easy to get confused.
If you currently own 12 shares of ACB and they are each trading for $0.76, your total ACB shares are worth $9.12. When those 12 shares get traded in for 1 new share, the stock price will trade for $9.12, but your 12 shares will still only be worth $9.12.
The only real change you’re going to see is that the stock price will look like it’s higher.
Many people will wake up after the split and see the “surging” Aurora stock price.
“It went from $0.80 to $9!”
But now you’ll know what’s really going on.
The Aurora stock price did not magically jump from $0.80 to $9 in just one day.
Of course, before that happens on May 11, shareholders have a tough decision to make. They are asking themselves what they should be doing with their shares of Aurora.
Well, we have the answer…
What to Do Before the Aurora Reverse Stock Split
While Aurora was never in any of our model portfolios, we realize that a lot of our members own shares of ACB.
And it’s obviously been difficult to watch the share price plummet in value, especially for those who bought in around the $9 to $11 price range.
Even with the reverse stock split, when shares start trading in the $8 to $10 range again, Aurora will still not be worth owning.
While Aurora started out as a promising cannabis company, it has never developed a long-term vision or plan to win the Canadian cannabis market.
It’s just too steep of a hill for Aurora to recover.
24 responses to “The May 11 Aurora Cannabis Reverse Stock Split”
April 14 2020