Arqit Quantum Inc. (NASDAQ: ARQQ) investors had a reason to take a breath on Thursday as the company’s stock price experienced a significant surge, closing at USD$5.60, which reflects a notable increase of 25.56 per cent from its previous close.
The anxiety reduction is likely due to the company’s multiple day performance, which saw it plummet to a new 52 day low during Wednesday trading, closing at USD$5.17. Prior to this, the stock had closed at USD$6.25.
The price spike came about as a natural response to Arqit’s board’s recent decision to implement a 25:1 reverse share split.
A reverse share split reduces the number of a company’s outstanding shares by consolidating them at a predetermined ratio, such as 25:1. This means shareholders receive one new share for every set number of old shares, increasing the price per share while maintaining the same total value of their holdings. Companies typically use reverse splits to boost their stock price, often to meet exchange listing requirements or improve their appeal to investors.
Furthermore, the broader market has shown increased interest in quantum technologies, particularly in quantum encryption, which is Arqit’s specialty.
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Arqit’s board implements 25:1 reverse share split
As cyber threats become more sophisticated, demand for quantum-safe encryption solutions has surged, positioning Arqit as a key player in this niche. In recent months, Arqit Quantum has announced several strategic partnerships and reseller agreements with major technology and cybersecurity players.
These collaborations aim to expand the reach of Arqit’s quantum-safe solutions, potentially boosting its market share and increasing investor confidence.
Market analysis indicates that the quantum cryptography sector is on an upward trajectory, with substantial growth projected in the coming years.
Arqit’s pioneering technology and focus on this sector make it well-positioned to benefit from this growth, attracting investor interest. Increased institutional buying and positive mentions from financial analysts, who see Arqit’s stock as undervalued given its growth potential, may also be driving the stock’s performance.
Although no specific financial reports were cited, the company’s recent financial health, including reduced operating expenses and a strong focus on commercialization, has likely contributed to the positive investor outlook.
Furthermore, HC Wainwright reaffirmed a “buy” rating and set a USD$2.00 target price for Arqit Quantum shares in a research report released on Thursday, July 11.
Additionally, an institutional investor recently purchased a new stake in the company. Cowen AND Company LLC acquired 100,000 shares of Arqit Quantum stock during the second quarter, valued at approximately USD$34,000, as disclosed in the company’s most recent 13F filing with the Securities & Exchange Commission.
As of this filing, Cowen and Company LLC owned 0.06 per cent of the company. Institutional investors and hedge funds now own 16.60 per cent of the stock.
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