Wizard World Inc. announced today in an SEC filing that they would be performing a reverse stock split on outstanding common stock, in which all outstanding shares would be traded between 5-for-1 to 20-for-1.
Wizard World was recently trading at 13 cents per share.
This reverse stock split would nominally increase the share price to a value of 65 cents per share to $2.60 per share, depending on the trade-in amount chosen by Wizard World's board of Directors.
A reverse stock split is a kind of corporate action that consolidates the number of existing shares of stock into fewer shares, which should be proportionally more valuable than the previous shares.
Essentially, the company reduces the total number of its outstanding shares available in the open market. According to Investopedia, it often signals a company in distress. A reverse stock split divides the existing total quantity of shares by a number such as five or ten, which would then be called a 1-for-5 or 1-for-10 reverse split, respectively. A reverse stock split is also known as a stock consolidation, stock merge or share rollback and is the opposite exercise of stock split, where a share is divided (split) into multiple parts.
Typically stock splits are done to increase the displayed value of a stock, and to move a falling stock with a value under one dollar to more than a dollar, to avoid classification as a penny stock and the trading restrictions that come with such classification.
81.6% of the outstanding shares of Wizard World Inc are owned by Paul Kessler or related companies, according to the SEC filing.
Disclaimer: The author owns shares in Wizard World Inc, in an amount that is less than 1% of the company. In fact, it's approximately 0.00002% of the company.
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