Siyata Mobile (NASDAQ: SYTA) stock will rise 10,000%, or 100x, at the open today. SYTA stock will rise not because the company has finally managed to get something right, nor has sorted out the company. Rather, this is a side effect of the fact that they have not - if we squint at it, that is. The base problem is that the stock price is too low, something long suffering shareholders know. So, something must be done and something it so be done.
Siyata’s business line is perfectly sensible and reasonable: “Siyata Mobile Inc. develops and provides cellular-based communications platform. It develops, markets, and sells rugged handheld Push-to-Talk over Cellular smartphone devices for first responders, construction workers, security guards, government agencies, utilities, transportation and waste management, amusement parks, and mobile workers in various industries. “ There often is good money in selling ruggedised versions of varied electronic equipment. Such good money being something regularly not achieved by Siyata. The last quarterly results show a couple of million in revenue, looses of more than a couple of million on that. Not a distinguished record.
The recent past is peppered with stock issues and announcements of deals being done. But the deals being done tend to be of a few hundred k of kit sold. Not transformative that is.
Siyata Mobile stock price from Google Finance
It’s that 94% stock price decline which causes the problem. The American stock markets are in the grips of a delusion - OK, a fashion. That penny stocks are not OK, that they’re the playground of frauds and manipulators. Therefore you cannot be a penny stock and be on a major exchange. If you are and want to remain on NASDAQ then something must be done.
That something is a reverse stock split. Simply declare that 100 old shares are now one new share. Exactly what Siyata is doing: “Siyata Mobile, Inc. (SYTA) will effect a one-for-hundred (1-100) reverse split of its Common shares. The reverse stock split will become effective on Wednesday, August 9, 2023.” This doesn’t change the value of the company, nor of any individual shareholding. It does change the number of shares which make them up - therefore, mechanically, it changes the price of each individual share.
It’s possible that the real price will change too - maintaining the NASDAQ quote might lead to some thinking the company’s safer or a better deal perhaps. But the real price movement here, the 100x, is purely nominal.