Please ensure Javascript is enabled for purposes of website accessibility

Why Guardion Health Sciences Stock Got Mashed on Monday

By Eric Volkman - Updated Mar 1, 2021 at 5:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company maintains its Nasdaq listing, but at a price.

What happened

On Monday, Guardion Health Sciences (GHSI 6.38%) put into effect a reverse stock split. Shares of the ocular health foods and devices specialist promptly sank on the news, ending the day nearly 12% lower.

So what

Since mid-2019, shortly after Guardion's debut on the stock exchange, its shares have consistently traded below the Nasdaq's effective $1 per share minimum. The exchange gave the company several chances to rectify this, most recently setting a March 15 deadline. The 1-for-6 reverse stock split was the company's fix of choice.

A person cutting a set of U.S. currency bills.

Image source: Getty Images.

It's important to remember that with either standard or reverse stock splits, the total value of an investor's holdings does not change; only the share count is modified.

In Guardion's case, it's mission accomplished: Even with the price decline in the wake of the split, the shares now trade well over the $1 threshold at $2.67 apiece. 

Now what

Reverse stock splits are indicative of companies that are struggling. Since launching its IPO in April 2019, Guardion has consistently landed deeply in the red due in large part to persistently high operating expenses. In its most recently reported quarter, for example, its net loss topped $2.1 billion, on only $253,188 in revenue.

Guardion is unique in the healthcare space and has reported some good news. A recent clinical trial indicated that its Lumega-Z produced "superior" results in improving vision, but the company is still deep underwater financially. Investors should approach with extreme caution, if at all.

 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Guardion Health Sciences, Inc. Stock Quote
Guardion Health Sciences, Inc.
GHSI
$0.17 (6.38%) $0.01
Nasdaq, Inc. Stock Quote
Nasdaq, Inc.
NDAQ
$147.49 (2.19%) $3.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.