Desktop Metal's Board of Directors has approved a 1-for-10 reverse stock split of the company’s Class A common stock.
It comes after Desktop Metal was hit with a New York Stock Exchange (NYSE) noncompliance notice (Rule 802.01C) with the average closing price of common stock less than 1.00 USD over a consecutive 30 trading-day period in November 2023. Despite having 6 months to organically raise the value of its stock back above the 1.00 USD mark for a consecutive 30-day period, Desktop Metal has been forced to effect a reverse stock split.
The reverse stock split became effective at 5:00 p.m. Eastern Time on June 10, 2024, after close of trading on the New York Stock Exchange. The Company’s Class A common stock commenced trading on a split-adjusted basis when the markets reopened on June 11, 2024 under the existing trading symbol “DM.” The new CUSIP number for the Company’s Class A common stock following the reverse stock split will be 25058X 303.
A reverse stock split has been pursued in a bid to increase the per share market price of the Company’s Class A common stock to meet the minimum per share bid price requirement for continued listing on the NYSE. As a result of the reverse stock split - which was backed by stockholders in an annual meeting on June 7, 2024 - every ten shares of the company's Class A common stock issued and outstanding will be automatically reclassified into one new share of the Company’s Class A common stock.
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A Desktop Metal statement read: "Proportionate adjustments will be made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans and certain existing agreements. The common stock issued pursuant to the reverse stock split will remain fully paid and non-assessable. The reverse stock split will not affect the number of authorised shares of common stock or the par value of the common stock."
It continued: "No fractional shares will be issued in connection with the reverse stock split. Stockholders who would otherwise be entitled to receive fractional shares as a result of the reverse stock split will be entitled to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing sales price per share of the common stock (as adjusted to give effect to the reverse stock split) on the NYSE on June 10, 2024, the last trading day immediately preceding the effective time of the reverse stock split."
After enacting the reverse stock split, Desktop Metal's share value stood at around 5.00 USD (June 10, 2024), but has since fallen to 3.66 USD (June 18, 2024).
