Luminar Technologies Conducts Reverse Stock Split: Light Sensor Manufacturer Fights Delisting

Luminar Technologies' shares showed significant declines on Thursday after the company executed a reverse stock split to avoid delisting by Nasdaq. Adjusted for the split, Luminar's shares fell by about 10% by 11 a.m. ET compared to Wednesday's closing price. The Nasdaq exchange requires listed companies to maintain a stock price of at least $1 per share. If this threshold is not met for 30 consecutive trading days, the company receives a notification that it no longer meets the requirements and has 180 days to remedy the situation. Companies receiving such notifications and not expecting an upward trend within the specified period often resort to a reverse stock split to meet the requirements. In this case, multiple shares under $1 are converted into a new share that (hopefully) exceeds the $1 threshold. Luminar's reverse split took effect on Wednesday evening. On October 15, Luminar received the respective notification. On October 30, shareholders approved the reverse stock split. As part of the split, 15 old shares were automatically converted into one new share after the markets closed on Wednesday. So why did the stock price fall on that day? Because reverse stock splits in response to delisting notifications are rarely considered a bullish signal. Had Luminar been confident that the stock price would rise in the coming months, the company might not have conducted the split. Since the beginning of the year, Luminar's shares have fallen by about 80%.