LM Funding Announces 1-for-6 Reverse Stock Split to Ensure Compliance with Nasdaq Continued Listing Requirements and to Attract a Broader Audience of Investors
LM Funding America, Inc. announces a 1-for-6 reverse stock split to comply with Nasdaq listing requirements. The company reports strong business fundamentals with 1700% year-over-year revenue growth in Q3 2023. Shareholders' equity was $35.9 million as of September 30, 2023. The reverse split aims to attract more investors and tighten the public float.
The announcement of LM Funding America, Inc.'s 1-for-6 reverse stock split is a strategic financial maneuver aimed at addressing the company's stock price in relation to NASDAQ's minimum bid price requirement. This action can be interpreted as a remedial step to prevent potential delisting, which could have severe repercussions on the company’s ability to attract investment and maintain shareholder value.
From a financial perspective, the reverse split does not inherently change the company's market capitalization, but it does adjust the share price upward, theoretically making the stock more appealing to institutional investors who may be prohibited from purchasing stocks below a certain threshold. Additionally, a higher per-share price may reduce volatility and improve the perception of the company's financial stability.
However, investors should be cautious as reverse splits can sometimes be viewed as a red flag indicating underlying business challenges. It's essential to consider the context provided by the company's claim of strong business fundamentals and significant year-over-year revenue growth when assessing the potential impact of this reverse split on the stock's future performance.
The reverse stock split by LM Funding America, Inc. could potentially tighten the public float—the number of shares available for trading. A reduced float often leads to less liquidity, which might increase the stock's bid-ask spread and could result in higher volatility. It's imperative to analyze how this strategic decision aligns with the company's reported growth and whether it aligns with broader market trends in the cryptocurrency mining and specialty finance sectors.
Furthermore, the company's positioning in the market and its ability to execute its business model post-reverse split will be crucial in determining its attractiveness to the broader investor universe it seeks to tap into. The reverse split may be a short-term solution, but long-term value creation will depend on the company's operational performance and the viability of its business model in the competitive landscape of cryptocurrency mining and finance technology.
LM Funding's reverse stock split follows a shareholder-approved amendment to the company's Certificate of Incorporation, showcasing a legal and procedural adherence to corporate governance practices. The reverse split is a legally sanctioned tool used by companies to manage their capital structure and stock price, reflecting a board's fiduciary duty to act in the best interest of the company and its shareholders.
Shareholders should note that while their pro-rata ownership remains unchanged, the implications of the reverse split, such as potential changes in liquidity and market perception, must be monitored closely. It's also important for shareholders to understand the legal processes and rights associated with such corporate actions, including the rounding up of fractional shares and the effects on individual holdings.
03/08/2024 - 08:30 AM
TAMPA, FL , March 08, 2024 (GLOBE NEWSWIRE) -- LM Funding America, Inc. (NASDAQ:LMFA) ("LM Funding" or "LMFA"), a cryptocurrency mining and technology-based specialty finance company, today announced a 1-for-6 reverse stock split of its outstanding common stock, effective at 12:01 a.m. Eastern time on March 12, 2024. Beginning March 12, 2024, LM Funding’s common stock will trade on a split-adjusted basis.
Bruce M. Rodgers, Chairman and CEO of LM Funding, stated, "We believe that our business fundamentals are currently strong and that we continue to make good progress, as evidenced by our 1700% year-over-year revenue growth in the third quarter of 2023. Notably, as previously reported, the stockholders’ equity of LM Funding was $35.9 million , or $2.45 per share (or $14.70 per share after giving effect to the reverse split announced today), as of September 30, 2023, and yet our current share price remains below the Nasdaq minimum bid price requirement of $1.00 . We believe this share consolidation will not only ensure we meet the continued listing requirements, but also help us to attract a broader universe of investors, including institutional investors and retail brokers that encounter share price restrictions. Importantly, the pro-rata ownership of each shareholder will remain unchanged as a result of the reverse split, and we believe this share consolidation will tighten our public float and enhance our capital structure as we continue to execute on our business model.”
At LM Funding’s Annual Meeting of Shareholders (the “Annual Meeting”) held on November 9, 2023, the Company’s shareholders approved a proposal to amend the Company’s Certificate of Incorporation to effect a reverse stock split of its common stock at a ratio within the range of one-for-two (1:2) to one-for-ten (1:10), as determined by the Company’s Board of Directors. On February 23, 2024, the Board of Directors adopted a resolution approving and authorizing a 1-for-6 reverse split, and on March 7, 2024, LM Funding filed a Certificate of Amendment to its Certificate of Incorporation to effect the reverse stock split effective as of March 12, 2024. There will be no change to the total number of authorized shares of LM Funding Common Stock as set forth in the Certificate of Incorporation of the Company, as amended.
LM Funding’s shares of common stock will continue to trade on the NASDAQ under the symbol “LMFA.” The new CUSIP number for the Company’s common stock post reverse stock split is 502074503.
Upon the effectiveness of the reverse stock split, every 6 shares of LM Funding’s issued and outstanding common stock will automatically be converted into one share of common stock. No fractional shares will be issued. Any fraction of a share of common stock that would be created as a result of the reverse stock split be rounded up to the next whole share.
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What did LM Funding America, Inc. announce regarding its stock?
LM Funding America, Inc. announced a 1-for-6 reverse stock split of its outstanding common stock.
When will the reverse stock split be effective?
The reverse stock split will be effective at 12:01 a.m. Eastern time on March 12, 2024.
What was LM Funding's year-over-year revenue growth in the third quarter of 2023?
LM Funding reported a 1700% year-over-year revenue growth in the third quarter of 2023.
What was the shareholders' equity of LM Funding as of September 30, 2023?
The shareholders' equity of LM Funding was $35.9 million as of September 30, 2023.
Under what symbol will LM Funding's common stock continue to trade on NASDAQ?
LM Funding's common stock will continue to trade on NASDAQ under the symbol 'LMFA'.
