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Online auto retailer Cazoo has confirmed that it will be conducting a “reverse stock split at a rate of $0.0001 per share.
When a company performs a reverse stock split, it increases the price of its stock by reducing the number of shares each investor owns without changing the market value.
There are a number of reasons why Cazoo is taking this step. On the New York Stock Exchange, shares must trade at more than $1 per share for 30 consecutive days or risk being written off.
Cazoo has been trading well below this for some time. Its share price is currently at 24 cents, down 94% from last year.
And in the US companies with very low share values, proved unattractive to investors. Owning fewer, higher-value stocks could help Cazoo’s cause.
Cazoo has been through the mill. In January Cazoo said it was restructuring its UK cost base by closing a number of centres.
In September it said it was withdrawing from mainland Europe and focusing on the UK together.
The company was floated on the New York Stock Exchange in 2021. It has built a brand with heavy spending on sports sponsorship and advertising in the UK and Europe.
In England a successful buying company to handle the preparation of cars. It also invests in highly rated data company Cazana to give it an edge in the market on price.
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