Here’s Why We’ve Changed Our Price Estimate For Alcoa

+5.19%
Upside
31.03
Market
32.64
Trefis
AA: Alcoa logo
AA
Alcoa

Alcoa (NYSE:AA) has completed a planned 1-for-3 reverse stock split, post the approval of the same at a special shareholder meeting on October 5. [1] The company had announced the planned reverse stock split earlier in the year, with the management expecting an increase in the per share stock price for Alcoa to translate into increased liquidity and facilitate the trading of its shares. [2] Alcoa’s shares started trading on a split-adjusted basis from October 6 onwards. Though the reverse stock split does not impact the company’s underlying business, or total value or market cap, it has led to a near tripling of the company’s share price. Accordingly, we have adjusted our model for Alcoa to account for the change in the company’s shares outstanding, which has translated into a tripling of our price estimate for the company.

AA Reverse Stock Split

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Alcoa

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Notes:
  1. Alcoa Inc. Completes 1-for-3 Reverse Stock Split, Alcoa News Release []
  2. Alcoa Announces Plan for 1-for-3 Reverse Stock Split, Alcoa News Release []