Hippo Holdings Inc. announced that it intends to file a proxy statement with the Securities and Exchange Commission that includes a proposal for a reverse stock split. This move comes in connection with a special meeting of stockholders to be held on August 31, 2022.
A reverse stock split is a step companies take to reduce their number of outstanding stock shares in the market, in which existing shares are consolidated into fewer, more valuable shares.
A company press release reported that the reverse stock split Hippo plans to propose to shareholders will be at a ratio in the range of 1-for-20 to 1-for-30, and the reduction of authorized shares of capital stock for the company will follow a corresponding proportion.
This means that in a 1-for-20 split, for example, shareholders would receive one share of new stock that is equal in value to every 20 shares they owned. Investopedia says a reverse stock split has no effect on the company’s value.
The Hippo press release said the proposed reverse stock split is intended to resolve an issue raised in a non-compliance notice Hippo received from the New York Stock Exchange on July 19, 2022. The notice pointed to the average closing price of the company’s common stock being less than $1 throughout 30 consecutive trading days. The notification has no immediate effect on the listing or trading of Hippo’s common stock on the NYSE, according to the release.
Hippo can regain compliance at any time within the six-month period following receipt of the NYSE notice if the company has a closing price of at least $1 per share on the last trading day of any calendar month during the cure period and an average closing price of at least $1 per share during the 30-trading day period ending on the last trading day of that month.
Hippo Holdings Inc.’s operating subsidiaries include Hippo Insurance Services, Hippo Home Care, First Connect Insurance Services, Spinnaker Insurance Company, Spinnaker Specialty Insurance Company, and Mainsail Insurance Company. Hippo Insurance Services is a licensed property/casualty insurance agent with products underwritten by various affiliated and unaffiliated insurance companies.