Majesco Planning Reverse Stock Split To Avoid Delisting
Majesco (Cooking Mama, NBA Baller Beats) finds itself under threat of delisting from NASDAQ for the third time since 2008. The company was warned in March of last year that it needed to bring its share value above $1 for ten consecutive business days.
The company received a 180 day extension in August 2013, putting the deadline for compliance on February 24, 2014. Majesco seeks another extension via appeal, and is pursuing a reverse stock split to help boost the share value.
This tactic was last publicized when THQ executed the maneuver in May 2012. Majesco is seeking a reverse split in the range of 1-to-3 to 1-to-10. At the time of publication, the Majesco share value is $.54. In the past three months, it has not pushed past the $.75 mark.
It’s important to note that a reverse stock split doesn’t change the market capitalization (which is a calculation of share value multiplied by outstanding shares). This won’t change Majesco’s financial position other than allowing them to continue trading on the exchange.
Reverse stock splits are cosmetic measures that are typically viewed by shareholders as the rock to delisting’s proverbial hard place. It didn’t work for THQ, and unless Majesco finds a way to inspire shareholder trust and raise the share price naturally, it likely won’t be more than a band-aid here.