Faced with the possibility of being delisted by Nasdaq due to its stock being worth less than $1, Quantum is implementing a reverse stock split to drive up the per-share price above a dollar.
The data management and tape library business was told by Nasdaq in March that, because its stock price has been below the minimum $1 threshold on the exchange for more than 30 days, it had to regain compliance with this listing rule or leave. Quantum had previously used a reverse stock split transaction in April 2017 to avoid a similar NYSE delisting threat. The company later transferred to the Nasdaq and has now had to repeat the reverse stock split maneuver.
Quantum’s stock price had declined in recent months due to accounting issues related to the pricing of standalone components in product bundles. This affected its ability to file SEC reports for its first, second, and third quarters of fiscal 2024, and led to a recalculation of its results for fiscal 2022 and 2023.
The business had also been hit by a hyperscaler ceasing purchases of its tape libraries, which resulted in a substantial revenue drop. This was revealed when it filed its fiscal 2024 numbers in June. At the time, chairman and CEO Jamie Lerner said: ”Our full year 2024 results reflect a significant reduction of revenue from our largest hyperscale customer, which we had expected would scale down over time but instead stopped placing orders at the end of fiscal Q1 2024.”
Now Quantum is implementing a 1 for 20 reverse stock split, meaning investors will own 1 share of its common stock for every 20 they owned before. If the 20 shares were priced at $0.19 each then the price for one new share will nominally be 20 x $0.19 or $3.80. The split was approved by the company’s stockholders at its 2024 annual meeting. The reverse stock split took effect at 4:01 p.m. Eastern Time on August 26, and will reduce the number of outstanding shares of the company’s common stock from approximately 95,849,938 shares to approximately 4,792,497 shares.
The reverse stock split will affect all shareholders uniformly and will not change any shareholder’s percentage ownership interest.
Quantum is focusing on its ActiveScale object storage and Myriad scale-out, all-flash, storage operating system software to drive revenues and regain profitability and long-term growth.
