Ashford Hospitality Trust (NYSE:AHT) stock Slumps: Time To Sell?

A reverse stock split is almost always seen as a negative development by investors and hence, it has come as no surprise to see the Ashford Hospitality Trust Inc (NYSE:AHT) stock struggling in the premarket trading period.

The stock declined by as much as 26% in premarket trading and it remains to be seen if the slide continues when the markets open today. This past Friday the company announced that its board of directors gave the approval for a 1 for 10 reverse stock split of the Ashford Hospitality common stock. It should be noted that the approval from the members of the board was unanimous.

The reverse stock split is going to go into effect from July 16, 2021 and the stock will start trading on a split adjusted basis on the New York Stock Exchange from July 19, 2021. It is a significant step from the company and it seems that the shareholders are not particularly happy about the move. Once it goes into effect, anyone holding a share in Ashford Hospitality will automatically see it get converted to a tenth of a common share in the company.

Market Reaction:

On Friday, AHT stock went down 8.33% at $3.96 with more than 63.44 million shares, compared to its average volume of 34.49 million shares. The stock had moved within a range of $3.9400 – 4.2871 after opening the trade at $4.21. Over the past 52-week, the stock has been trading within a range of $1.2700 – 8.5100. Moreover, the stock is down another 26% to $2.94 in the pre-market session.