Bulk dry shipping company Castor Maritime (NASDAQ:CTRM) has had a notably rollercoaster ride so far this year and earlier on this week, the stock nosedived hard after the company made an announcement with regards to 1 for 10 reverse stock split.
The stock split is going to go into effect on May 28 and the decline in the stock on Monday actually extended the run of declines recorded to as many as 16 consecutive sessions. The move made by the stock was possibly aimed at meeting the minimum bid price requirement of $1 a share so that the company’s stock could continue to be listed on NASDAQ.
After the reverse stock split does go into effect, each block of 10 outstanding Castor Maritime stocks are going to be turned into a solitary stock. In addition to that, it is also important to note that the reverse stock split is also going to reduce the number of outstanding Castor Maritime shares to around 90 million from 899.6 million.
This was pointed out by the press release published by the company. Another important thing to point out in this regard is the fact that earlier on in May; Castor Maritime had managed to raise as much as $125 million through the sales of 192 million shares as well as warrants.
However, at the end of that transaction, the number of outstanding shares ballooned to 900 million and that is a pretty high number for a company of its size. Hence, the move starts to make even more sense. The stock has also been the target of retail investors from the Reddit community WallStreetBets and that resulted in intermittent rallies in the stock due to short squeezes.
Over the course of the past six months, the company has seen its stock rise by as much as 200% and there are many investors who believe that Castor Maritime could benefit if there is a strong economic rebound.
