Lightning eMotors will consolidate their shares by the end of the week to stay listed on the New York Stock Exchange.
The Loveland, Colorado-based company's board, which had been considering a reverse stock split since months, voted on Monday to implement the maneuver of converting one share into 20 after the Friday market close.
On Monday, April 28th, when the markets reopen after the weekend, new shares of the company will be listed.
The company announced that the stock conversion would be automatic for all shares. Instead of issuing fractional stock to stockholders who have a total number of shares not divisible by 20 the company will instead pay cash dividends.
The news of the share merger has caused Lightning eMotors stock to plummet 29% in midday trading.
The company wants to be listed on the NYSE, but to do so it must have a share price that is regularly above $1.
Lightning eMotors was notified by the exchange on December 14 that if it did not raise its share price, the company would be delisted from the exchange.
Earlier this year, the company received approval from its shareholders for a reverse split.
At current prices, the reverse split would boost the stock price of the company to $4.80 per shares.
Lightning eMotors has also listed stock warrants on the exchange. If company shares trade above $11.50 they could be used to buy nearly 15 million shares. The warrants can be exchanged for 749.998 Lightning eMotors shares if the exercise price is $230 per share after Friday's reverse-split, according to the company.
Lightning eMotors became public in May 2021 through a reverse merge with a special-purpose shell company. This is known as a SPAC (special purpose shell companies) merger.
Lightning eMotors raised $268 million in the deal to finance its growth and to provide resources for retrofitting thousands of combustion engine cargo vans, trucks, buses, and other large work vehicles into battery electric versions.
It was a company that had gained momentum through the retrofitting of hundreds of passenger vans, cargo vehicles, and other commercial vehicles. They were a leader in meeting demand to electrify fleets.
Lightning eMotors invested in its own vehicle chassis since then to overcome the supply chain shortages. It says that it also has struggled to get Romeo Power, a Los Angeles-based battery supplier recently acquired by Nikola Corp. maker of electric 18 wheel trucks, to honor warranties on battery defects.
Lightning eMotors has offered to rebuild dozens vehicles that it assembled last year for its customers, using Romeo Power batteries. Instead, the CEO Tim Reeser stated on the company’s fourth quarter conference call.
Lightning eMotors stock has been declining for a while.
The company has narrowed its focus on electric conversions for the vans and trucks that receive the largest federal subsidies for electric vehicles. This helps the company to move away from the Romeo battery and the Ford chassis.
Lightning eMotors, a company that produces electric powertrains and vehicles, announced earlier this month that they produced 53 units in the first quarter which ended on March 30. This gives the company a significant amount of inventory.
Reeser stated that he expects production to rise as a result of our response to the increased demand for the ZEV4 platform, and the impact the new incentives will have on the customer's demand for the products.