Key points:
- Top Ships is up 1,900% so far today
- Or, we can say down 5%, or even down 50% in 24 hours
- Which are we more interested in, real or nominal prices?
Top Ships (NASDAQ: TOPS) stock price is all over the place and we can variously describe it as down 90% over the past 12 months, up 1,900% today premarket, or even down 50% in the past 24 hours. All of those numbers are true for a given definition of truth. Which is one of those little difficulties we always have – that differentiation between real and nominal numbers. The point being that it's only changes in real valuations and prices which make us money – changes in nominal prices can confuse but they're not profitable.
Top Ships runs oil tankers and that's, in itself, something of a little tale. Sure, it's a small company, 1.4 million deadweight tonnes in the fleet, 5 Suezmax, two VLCCs and a few much smaller vessels. That the stock price has been falling so badly at a time of a booming tanker market isn't all that great a sign to be honest. That massive change to which oil goes where as a result of sanctions we might think should have boosted matters.
The effect of that 90% TOPS stock price fall though is that it has fallen below the NASDAQ $1 minimum offer price rule. So, something must be done and something has been done. There's been a reverse stock split – a consolidation to Brits. Here simply that what used to be 20 pieces of stock is now one. A 20 for one reverse split that is. This should not change – not directly at least – the market capitalisation of the company nor the value of any individual holding. It just changes the number of pieces of paper that make up that holding or capitalisation.
Also Read: The Best Oil Stocks To Buy Right Now
So, we've a 20 for 1 reverse stock split and the price rise should be 2,000%. But it is only that 1,900%, so we could say that TOPS is 5% down on the action. But that would be to miss the slightly earlier period. TOPS also fell 9 cents yesterday, for a 44% fall. So, a better valuation over 24 hours would be that Top Ships is down some 50%. Which, as a response to an action to keep the NASDAQ quotation is really pretty bad.
As to why such reverse stock splits this is entirely fashion. The New York markets just think – for whatever reason – that a solid and dependable stock should be in the $10 to $100 range. That this is just fashion is shown by London's similar range being £1 to £10. This is why ADRs of London stocks are so often 10 pieces of the London stock – to be in that “good” price range on both markets.
NASDAQ and the NYSE also seem to think that penny stocks are the preserve of rogues and charlatans – so, penny price stocks lose their listings on those markets. In order to retain the listing something must be done – the reverse stock split.
It is fair to say though that it's unusual for a reverse stock split which then retains a NASDAQ listing to cause a 50% real value loss. TOPs has managed that and Hurrah! for TOPS really.
