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Investing.com -- Entero Therapeutics Inc (NASDAQ:ENTO) stock fell 5.7% after the clinical-stage biopharmaceutical company announced plans for a 1-for-3 reverse stock split to regain Nasdaq compliance.
The company, which specializes in developing targeted therapies for gastrointestinal diseases, will implement the reverse split effective August 18, 2025. The move aims to meet Nasdaq’s minimum bid price requirement of $1.00 per share for continued listing on the Nasdaq Capital Market.
Following the split, Entero’s outstanding common shares will be reduced from approximately 4.77 million to 1.59 million. Stockholders who would otherwise receive fractional shares will instead receive cash in lieu of those fractional shares.
"The reverse split is a necessary step in our efforts to maintain our listing on the Nasdaq market. The visibility and credibility that comes with a Nasdaq listing is an important component in our efforts to enhance shareholder value," said Richard Paolone, Entero’s Interim Chief Executive Officer.
Reverse stock splits are typically viewed cautiously by investors as they often signal financial challenges, though they don’t fundamentally change a company’s market value. The negative market reaction to Entero’s announcement reflects this investor sentiment despite management’s focus on maintaining Nasdaq listing benefits.
The company’s board of directors and shareholders had previously approved the reverse stock split as part of the company’s compliance plan.
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