Nakamoto (NAKA) has enacted a 1-for-40 reverse stock split, a move designed to lift its share price above the minimum required by Nasdaq. The struggling crypto firm reported a $238 million net loss for the first quarter, and its stock had been in a prolonged decline.
Why the reverse split
Companies listed on Nasdaq must keep their bid price above $1. Nakamoto's shares had fallen well below that threshold for months. A reverse split reduces the number of outstanding shares while raising the per-share price proportionally. It doesn't change the company's market value, but it can stave off delisting.
The 1-for-40 ratio is aggressive. Each investor will now hold one share for every 40 they previously owned. The goal is to push the stock price high enough to satisfy Nasdaq's continued listing standards. If the price stays above $1 for 10 consecutive trading days, the exchange typically considers the requirement met.
Financial picture
Nakamoto's troubles go beyond its stock price. The company posted a net loss of $238 million for the first quarter, a figure that underscores the cash burn in its crypto operations. Revenue figures were not disclosed in the facts provided, but the loss alone suggests persistent headwinds.
The reverse split comes as no surprise to investors who have watched the stock slide. The company has been searching for ways to reverse its fortunes, including cost cuts and strategic shifts. But the $238 million loss raises questions about how long Nakamoto can sustain itself without a turnaround.
Nasdaq compliance timeline
Nasdaq gave Nakamoto a grace period to fix the bid-price issue. The reverse split is the most direct path to compliance. Once the split takes effect, the company's stock will trade under the same ticker, NAKA, but at a higher price.
Investors should expect volatility in the days after the split. Reverse splits often draw short-term traders looking to bet on the stock's next move. But the fundamental problems remain: Nakamoto needs to show it can generate revenue and narrow its losses.
The next milestone is the 10-day compliance check. If Nakamoto's shares close at or above $1 for that stretch, it will receive a formal notice from Nasdaq that it has met the requirement. If not, the company could face an extension or a delisting appeal.
For now, all eyes are on the opening price under the new share structure.
