Trump-Backed Bitcoin Mining Company Plans Reverse Stock Split to Stay Listed on Nasdaq
Key highlights:
- American Bitcoin will execute a 1-for-15 reverse stock split on July 2
- Shares have plunged 86% over the past year and more than 41% in the last month
- The move aims to restore compliance with Nasdaq's minimum bid price requirement
American Bitcoin Corp. (ABTC), the Bitcoin mining and treasury company co-founded by Eric Trump and majority-owned by Hut 8 Corp., will carry out a 1-for-15 reverse stock split as it seeks to avoid falling out of compliance with Nasdaq listing requirements.
The reverse split is scheduled to take effect after market close on July 2, with trading expected to begin on a split-adjusted basis when markets reopen on July 6. The company will retain its ABTC ticker symbol while receiving a new CUSIP number.
The announcement comes after a prolonged selloff that has left the stock trading near record lows.
Shares hit all-time low despite Bitcoin treasury strategy
American Bitcoin shares fell to a record low of $0.6203 on Wednesday, according to recent data. At around $0.636, the stock had lost more than 41% over the past month and nearly 86% over the last year.
The decline has occurred despite the company's strategy of combining large-scale Bitcoin mining operations with Bitcoin accumulation on its balance sheet.
Like several publicly traded crypto firms, American Bitcoin has struggled as investors reassess the value of Bitcoin-linked equities amid volatile market conditions.
The stock's collapse pushed it below Nasdaq's minimum bid-price threshold, forcing management to pursue corrective measures.
Reverse split to reduce share count by over 1 billion shares
Under the approved plan, every 15 shares of Class A and Class B common stock will be consolidated into one share.
The move will reduce the company's outstanding share count from approximately 1.09 billion shares to roughly 73 million shares.
Management said the primary objective is to raise the stock's per-share price and maintain the company's listing on the Nasdaq Capital Market.
The proposal was approved by shareholders during the company's annual meeting on June 22 before being finalized by the board.
While reverse splits do not alter a company's market capitalization, they are frequently used by firms whose stock prices have fallen below exchange requirements.
Investors remain cautious
Reverse stock splits often receive a mixed reception from investors.
While they can help companies maintain exchange listings and preserve access to capital markets, they are also commonly viewed as a sign of underlying weakness because they do not improve a company's financial performance or business fundamentals.
For American Bitcoin, the challenge will be convincing investors that its long-term Bitcoin accumulation strategy can create shareholder value despite the stock's steep decline.
The company became publicly traded through a merger last September as part of Hut 8's broader effort to build what it describes as a Bitcoin infrastructure platform in the United States.
With shares near all-time lows and sentiment toward Bitcoin mining stocks remaining fragile, investors will be watching closely to see whether the reverse split stabilizes the stock or merely delays broader concerns about valuation and growth prospects.
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