Lordstown Motors Corp announced on Tuesday that it will carry out a reverse stock split in order to meet the Nasdaq listing requirements and appease investor Foxconn. The 1:15 split will take place on May 24th.
The electric vehicle startup’s shares have been trading below the $1 minimum requirement of the Nasdaq, and the company had warned earlier this month that it might be forced to file for bankruptcy due to uncertainty over the investment from Foxconn.
The $170 million investment from Foxconn is crucial for the company, and the reverse stock split is seen as a way to appease the investor and ensure the deal goes through.
Lordstown Motors shares fell 10% in premarket trading to $0.26 following the announcement. The company has said there is no assurance that the Foxconn deal will close, and investors will be watching closely to see if the reverse stock split will be enough to secure the investment.