Virgin Galactic Holdings Inc (NYSE:SPCE) shares are set to tumble 9.4% on Thursday after the space tourism company confirmed plans for a reverse stock split, after it was warned by NYSE that its share price is too low.
The company said in an afterhours announcement on Wednesday that directors had approved a 1-for-20 reverse stock split, after shareholders approved a share consolidation move at the annual meeting yesterday.
It is expected to become effective at 5pm Eastern Time this Friday after close of trading, meaning the shares would begin trading on a split-adjusted basis from next Monday.
"The primary goal of the reverse stock split is to increase the per share market price of the company’s common stock to meet the minimum per share bid price requirement for continued listing on the NYSE," Virgin Galactic said.
As a result of the reverse stock split, every 20 of currently issued shares will be automatically reclassified into one new share, with no fractional shares issued in connection with the move.