Ashford Hospitality Trust (NYSE:AHT) Stock Slumps 25% in a Week: A Good Buy Now?

News of a reverse split almost always comes as a negative trigger for a company’s stock and that seems to have happened with the Ashford Hospitality Trust (NYSE:AHT) stock.

Over the course of the past week, the stock has continued to slide and has fallen by as much as 25%. The slide in the stock is a direct consequence of the company’s decision to go for a 1 for 10 reverse stock split. This implies that investors who currently own 10 shares in the company are going to end up owning only 1. The announcement was made on July 2 and since then the stock has been in the middle of a downward spiral.

The reverse split is going to come into effect on July 15, 2021 after the closure of markets. The Chief Executive Officer of Ashford Hospitality Trust revealed that the company had to go for this move since there are certain funds which cannot own the stock if it goes below $5 a share. In addition to that, the low price of the stock had also been a deterrent for options trading. Investors could consider keeping an eye on the stock and see if it manages to make a recovery.

Market Reaction:

On Tuesday, AHT stock fell 12.22% at $1.94 with more than 40.93 million shares, compared to its average volume of 37.89 million shares. The stock had moved within a range of $1.9400 – 2.2300 after opening the trade at $2.20. Over the past 52-week, the stock has been trading within a range of $1.2700 – 8.5100.