The FOA reverse stock split goes into effect and appears to be having the intended impact
Coinciding with the effective date for a previously announced reverse stock split, the price for shares of a leading reverse mortgage lender has risen Finance of America (FOA) was well above the minimum threshold New York Stock Exchange (NYSE) requires that trading activity be maintained.
As of the close of trading on Friday – the day the reverse stock split took effect – FOA’s stock price rose from $0.73 at the end of trading on Thursday to $7.19 per share the next morning, which is roughly matches the 10:1 ratio the company used. explained, would take place on the effective date.
As of 4:00 PM EST on Friday, the stock price was up 3.43% from the morning hours. sitting at about $7.72 per share.
This was the intended impact of the measure, according to documents from the supervisors and company officials we spoke to HousingWire‘s Reverse Mortgage Daily (RMD) in the days leading up to the effective date.
“[E]“Very ten issued and outstanding shares of the Company’s Class A common stock will automatically be reclassified into one issued and outstanding share of the Company’s Class A common stock,” the company explained when it announced the effective date of the measure last week. “No fractional shares will be issued as a result of the reverse stock split.”
RMD contacted FOA for comment, and a company representative referred questions a new 8-K application with the Securities and Exchange Commission (SEC) posted Friday.
All shares of Class A common stock “outstanding immediately following the effectiveness of the reverse stock split remain fully paid and non-assessable,” the filing said, and the shares continue to trade on the NYSE under the “FOA” symbol.
The split “had the principal effect of proportionally decreasing the number of outstanding shares of Class A common stock in a 10:1 reverse stock split,” the filing said.
The stock market broadly rallied on Friday, according to reports bee CNNwhich comes from strong business performance and a prevailing perspective that the Federal Reserve could cut rates by this fall.
“The Dow Jones rose 624 points, or 1.6%, on Friday after rising more than 800 points earlier in the session. The S&P 500 gained 1.2% and the Nasdaq Composite rose 1%,” CNN reported.
FOA explained in a filing with the SEC last month that it has taken steps to conduct the reverse stock split to bring its stock price into line with the NYSE’s continued listing standard, which requires publicly traded shares to be priced at a minimum of $ 1 per share to maintain. for a continuous period of 30 trading days.”
The company explained that it expected the move to “bring the trading price per share of our Class A common stock back above $1.00,” and also said it believed it would “make our Class A common stock more attractive could make for a broader range of institutional investors. and other investors,” the company said in announcing the move in June.
In December 2023, the company received a notice from the NYSE that it did not meet the exchange’s continued listing standard. FOA said it returned to compliance after this point, but NYSE issued a second notice in February 2024.
Earlier this month, the NYSE took steps to begin delisting FOA’s warrants, trading under the ticker symbol “FOA.WS,” although its Class A common stock trading under the ticker symbol “FOA” continued to be traded.
Earlier this month, credit rating agency Fitch announced that the long-term issuer rating (IDR) for FOA had been downgraded following the announcement of a debt exchange plan that averts maturity risk after 2025.
