Why KULR Technology Stock Is Plummeting Today

KULR Technology (NYSEMKT: KULR) stock is getting hit with huge selling action in Monday's trading. The company's share price was down 21.3% as of 3 p.m. ET, despite the S&P 500 (SNPINDEX: ^GSPC) being up 0.9% at the same point in the day's trading.

KULR is seeing a big valuation pullback today following news that the company will carry out a reverse stock split. The new structure for the stock won't do anything to alter the fundamentals of the business, but investors are dumping shares ahead of the 8-for-1 reverse split that will take effect on June 23.

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KULR stock tanks on reverse split news

After surging late in 2024's trading, KULR stock has seen big sell-offs this year. The company's share price is down roughly 74.5% year to date. As a result of the big valuation pullback, KULR's share price is currently below the $1 threshold necessary to continue trading on the NYSE-American Market.

By announcing the reverse stock split before its shares had been trading below the threshold for a significant amount of time, KULR may also be able to avoid new rules from the New York Stock Exchange approved earlier this year that make it more difficult to use reverse splits to remain in compliance.

What's next for KULR stock?

KULR's reverse stock split will take effect next Monday and will result in the equivalent of eight existing shares being combined into one new share. The move will have the effect of boosting the company's share price, but it won't alter the fundamentals of the business.

Continuing to trade on the NYSE-American Market exchange is probably a good thing for KULR over the long term because it will continue to make the stock easily available for a wide range of investors. On the other hand, it's not hard to see why some investors are reacting negatively to the reverse stock-split news. Reverse splits often occur because a company and its stock are struggling, and they can also limit some of the potential for explosive short-term gains that some investors may be seeking with penny stocks.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.