THQ Announces 1-For-10 Reverse Stock Split
THQ has been in deep water recently. They’ve been forced to close many different studios, and lay off hundreds or even thousands of employees. And, worst yet, for the last 6 months or so they’ve been under the threat of delistment from the NASDAQ stock exchange unless they can get the share price of their stock to remain above a dollar for 10 consecutive days.
In order to obtain that goal, THQ will be performing what is called a reverse stock split at a 1 to 10 ratio. What that means is that for every 10 shares that a person owes, they will instead have 1 share after the split. Any fractional shares that would be left over will be dropped, and the shareholder who would hold that share will instead receive a cash payment based on the average of the 5 day preceding the July 9th reverse stock split.
By doing this, this will take the value of the stock from $.62 to $6.20 apiece. Of course, by doing such a huge reverse split like this it could backfire on THQ and the stock price can plummet. Even if the stock price remains above $1 dollar for those ten consecutive days, if the stock drops too low, like, say to $3.10 that could really cause a lot of different problems than just being delisted. We’ll see how this plan works out for them.
