Pernix Therapeutics (PTX) Stock: Taking a Dive on Reverse Stock Split

Pernix Therapeutics Holding Inc (NASDAQ: PTX)

Pernix Therapeutics is having a rough day in the market today, and for good reason. The company announced that it is moving forward with a reverse stock split. Today, we’ll talk about the news, how the stock is reacting and what we can expect to see from PTX ahead.

PTX Announces Reverse Stock Split

As mentioned above, Pernix Therapeutics is having a rough day in the market today after announcing a stock split. Early this morning, the company said that its Board of Directors has unanimously approved a 1-for-10 reverse stock split.

As a result of the reverse split, each share of PTX will be converted into one tenth of a share of commonstock. Of course, no value will be lost on the conversion. The split is expected to take place at the close of business today.

Why Is This Causing The Stock To Fall?

At first glance, a reverse stock split doesn’t seem like a bad thing. In fact, all it is, is an aesthetic change to the stock. However, it’s not the fact that a reverse stock split is taking place that’s sending the stock downward. The problem is why the reverse stock split has to take place.

As a company that’s listed on the NASDAQ, PTX is required to keep a minimum bid price on the stock of $1.00 per share. Unofrtunately, the company’s share value has fallen below that price, resulting in warnings. However, at this point, it doesn’t seem like the stock is going to grow to $1.00 per share by December 14th, the date at which the stock would be delisted if it does not average $1.00 per share for 10 consecutive days. So, because the company couldn’t build investor excitement, and get momentum going, they have been forced to perform a reverse stock split to maintain their NASDAQ listing.

How The Stock Reacted To The News

As investors, we know that the news moves the market. Positive news generates gains and negative news will lead to declines. In the case of Pernix Therapeutics, the news that was released was ultimately negative. While the company did try to ice the story with news of a vote to adopt a majority vote standard, that plan didn’t work. At the end of the day, investors are concerned that a reverse split was the only option. As a result, we’re seeing massive declines in the value of the stock. Currently (11:49), PTX is trading at $0.42 per share after a loss of $0.14 per share or 25.41% thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively bullish opinion of what we can expect to see from Pernix Therapeutics. First and foremost, today’s declines are a big overreaction to what’s going on. As a result, I’m expecting to see a positive correction sooner rather than later. Also, I’m impressed with what Sedor has done since he has taken over the company. Ultimately, he has worked to streamline the sales process, making sales reps more efficient and reducing costs along the way. While there’s still a bit of an uphill battle here, I do believe that PTX is headed in the right direction.

What Do You Think?

Where do you think PTX is headed moving forward? Join the discussion in the comments below!