Does Reebonz’s latest reverse stock-split exercise matter to investors?

Samuel Lim, founder and chief executive officer of Reebonz Pte, poses for a photograph at the company's headquarters in Singapore, on Friday, Jan. 2016. Photographer: Nicky Loh/Bloomberg

Since it started trading on Nasdaq in December 2018, Singapore-based online marketplace luxury goods e-commerce player Reebonz Holdings Limited (RBZ) has seen its stock price go on a roller-coaster ride from a high of around $10 to as low as $0.86 before closing at $8.50, following a one-for-eight reverse stock split exercise announced on March 15, 2019.

While this is not a stock for the ‘weak hearted’, there are concerns among investors whether the various swings in the stock price are due a relatively small float of 405,150 shares (pre-reverse stock split), or due to some underlying issue with the overall fundamentals.

While most investors are relieved by the latest moves by Reebonz to ensure it meets the listing requirements on the Nasdaq Stock Exchange on March 29, the longer-term concerns will still be focused on the management’s ability to create value add for shareholders.

To recap, Reebonz merged with Nasdaq-listed Draper Oakwood Technology Acquisition (DOTA) last year and, on December 20, DOTA started trading as Reebonz Holding Ltd (RBZ). However, six days after it started trading, RBZ disclosed in an SEC filing that it did not meet Nasdaq’s minimum shareholders’ equity requirement of $4 million. Subsequently, the company’s warrants were suspended on February 27. Reebonz’s ordinary shares continue to be listed on the Nasdaq Capital Market. It now has until March 29 to meet the requirements

Reebonz is backed by Vertex Ventures, GGV Capital and Intel Capital. Early in January, Singapore-based Vertex Ventures acquired $5 million worth of common shares in RBZ. Another UK-based investor, S4 Limited, also agreed to acquire 1 million shares of Class A common stock in RBZ, according to an SEC filing.

DEALSTREETASIA digs deeper to analyse the company’s moves related to its recent reverse stock split, its preliminary earnings and also its guidance figures. 

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