Why Canoo Stock Lost 7% Today on Its Stock-Split News
One financial engineering move nearly guaranteed to make investors unhappy is the reverse stock split. An aggressive one enacted by specialty electric vehicle (EV) maker Canoo (NASDAQ: GOEV) on Friday was the spark that lit the fire of the stock's rout on the market. It closed the day nearly 7% lower in price, a far worse performance than the S&P 500 index's 0.7% slide.
At least Canoo is acting quickly. It announced the 1-for-23 reverse stock split on Wednesday morning, saying that the move would take effect on Friday. Even though they knew the share count would shrink dramatically, investors eagerly sold out of the EV company's stock on "split day."
Prior to that, shareholders had voted on the move at a special meeting convened at the end of February. At that point, they assented to Canoo doing a reverse split at a ratio ranging from 1-for-2 to 1-for-30 within one year of the meeting.
Source Fool.com
