American Bitcoin plummets 8.4% as Trump-backed firm prepares reverse split to maintain exchange listing
The publicly listed cryptocurrency mining operation supported by the Trump family has scheduled a 1-for-15 reverse stock split for the coming week in an effort to elevate its trading price and maintain its position on the Nasdaq exchange.
Stock in American Bitcoin (ABTC), the crypto mining enterprise with Trump family backing, plummeted to a record low on Wednesday following the company's announcement of a scheduled 1-for-15 reverse stock split designed to preserve its Nasdaq listing status.
The company announced that the reverse stock split would take effect following the conclusion of Thursday's trading session, with split-adjusted trading commencing when markets open on Monday morning. The stock will maintain its current ABTC ticker symbol.
According to the announcement, each 15 shares of both Class A and Class B common stock will be consolidated into a single share. This consolidation is projected to reduce the total outstanding shares from over 1 billion down to approximately 73 million.
As the sole publicly traded cryptocurrency enterprise connected to the Trump family's extensive involvement in the digital asset space, American Bitcoin's reverse stock split carries significant implications, as such corporate actions are generally viewed unfavorably since they suggest the business is experiencing financial difficulties and attempting to inflate its stock price through mechanical means.
The company stated that the consolidation strategy is intended to elevate share prices to satisfy Nasdaq's minimum bid price standards, which authorize the exchange to remove companies from listing if their stock closes below $1 for 30 consecutive trading sessions.
The reverse stock split received shareholder approval on June 22.
American Bitcoin shares hit all-time low
American Bitcoin's stock plunged approximately 8.4% during Wednesday's session, finishing at a record closing low of 62 cents per share. The security experienced a modest recovery in after-hours trading, climbing 4.5% to reach 65 cents.
Year-to-date, American Bitcoin's shares have declined more than 63%, and the stock has plummeted over 92% from its debut on the Nasdaq exchange on Sept. 3.
Donald Trump Jr. and Eric Trump, sons of US President Donald Trump, co-founded the enterprise in early last year.
The path to becoming publicly traded involved American Bitcoin's merger with Nasdaq-listed entity Gryphon Digital Mining, with the Trump brothers and cryptocurrency mining operation Hut 8 collectively controlling approximately 98% of the combined entity.
The stock's declining trajectory occurs against the backdrop of a broader cryptocurrency market slump. First quarter results released by American Bitcoin in May showed the company sustained losses totaling $81.7 million.
American Bitcoin isn't alone in employing reverse stock splits to bolster share values. Nakamoto, a Bitcoin-focused financial services firm, executed a 1-for-40 reverse stock split in May as part of its effort to preserve its Nasdaq listing after the stock bottomed out at 16 cents in April.
As of early Thursday, Bitcoin (BTC) was changing hands near the $60,000 level, representing a 32% decline year-to-date and having fallen by more than half from its October peak above $126,000, based on data from CoinGecko.