Adial Stock Plummets After 1-for-25 Reverse Split News

Adial Stock Drops on Reverse Split Announcement

Adial Pharmaceuticals Inc (NASDAQ:ADIL) stock experienced a sharp 19.9% decline in after-hours trading following the company's announcement of a 1-for-25 reverse stock split. The split is scheduled to become effective on February 5, 2026.

Overview of the Situation

The clinical-stage biopharmaceutical firm stated the reverse split is a strategic move to regain compliance with the Nasdaq Capital Market's minimum bid price requirement of $1.00 per share. Following the consolidation, Adial's outstanding shares will decrease from approximately 27.8 million to about 1.1 million. The stock will continue to trade under the symbol ADIL on a split-adjusted basis starting February 6, 2026.

Impact on the Market

CEO Cary Claiborne noted that the split aims to strengthen the company's capital markets profile and attract more long-term institutional investors. Shareholder ownership percentages are not expected to change, except for fractional shares which will be paid out in cash. The immediate negative stock reaction reflects market sentiment toward such corporate actions, which are often seen as a measure to prevent delisting.

Summary

This reverse stock split is a critical step for Adial to maintain its listing while it advances its primary drug candidate, AD04, for Alcohol Use Disorder. Investors will be watching to see if this move can provide the long-term stability the company seeks.

FAQ

Q: Why did Adial Pharmaceuticals announce a reverse stock split?
A: The primary reason is to meet Nasdaq's minimum bid price requirement of $1.00 per share and avoid delisting.

Q: How will the reverse split affect existing shareholders?
A: Shareholders will own fewer shares, but their overall ownership percentage in the company will remain the same, excluding adjustments for fractional shares.

Source: Investing.com