Oil and natural gas stock Chesapeake Energy (CHK) has announced that the company’s expected reverse stock split is set to occur on April 13, subject to shareholder approval.
With shares now trading at just $0.17, the reverse split is intended to increase the per share trading price to satisfy the $1 minimum bid price requirement for continued listing on the NYSE.
As a result of the reverse stock split, every 50 to 200 (as determined by the company’s board) shares of CHK’s common stock will automatically combine into one share, and the number of shares of common stock outstanding will be accordingly reduced.
If approved by shareholders, the split will become effective at 5PM April 14, 2020, with trading of the split-shares resuming under the existing trading symbol “CHK” on April 15, 2020.
Overall, analysts rate CHK a Strong Sell, according to TipRanks. In the last three months, 7 analysts have published sell ratings on the stock with only 1 analyst staying on the sidelines. Meanwhile the average analyst price target stands at $0.2 (18% upside potential). (See Chesapeake’s stock analysis on TipRanks)
Indeed, Piper Sandler analyst Kashy Harrison recently downgraded Chesapeake Energy to sell from hold with a price target of $0, down from $1.
The stock has plunged 80% year-to-date with investors anxious that the company’s hefty debt load combined with extremely low oil prices will push CHK into bankruptcy.