Eco-tech small cap Comstock dives after reverse stock split

Shares of Comstock, a small-cap provider of decarbonization solutions, fell more than 10% yesterday, February 18, and continued to retreat as of this writing today, February 19. The trigger was an announced reverse stock split whereby 10 shares will be consolidated into one. Still, the authorized number of shares will remain unchanged, meaning that if the company needs to raise capital, it will be able to sell more shares, according to Noble Capital Markets.

Comstock slid more than 10% on the New York Stock Exchange yesterday to close at $0.32 per share, with the losses spilling over to today, when the stock gave up another 3.6% in the first hour of trading. Since the beginning of the year, it is now down more than 60%.

On Friday, February 14 (U.S. markets were then closed for a three-day weekend), the company announced a 1-for-10 reverse stock split. Only about 23.8 million shares will remain outstanding, with the split to take effect on Tuesday, February 25. The number of authorized shares will remain unchanged, the company noted.

Comstock, founded four years ago, develops technologies and materials for decarbonization — that is, the transition to a low-carbon economy. For example, its division Comstock Fuels says it can efficiently crack wood into a profitable biofuel, while Comstock Metals is capable of recycling all useful materials from end-of-life solar panels, preventing them from ending up in landfills.

Over the last four years, the company has evolved, albeit with a few missteps, from a startup into a player ready to commercialize its products, claimed CEO Corrado De Gasperis in a January letter to investors. “Comstock Metals has now ramped up, gaining world-class customers and permitting the expansion to industry scale production. Comstock Fuels has already signed five international agreements,” he said in the letter.

The business is developing faster than originally expected, De Gasperis noted. The company now aims to build three commercial facilities for renewable metals and multiple commercial facilities, both owned and licensed, for renewable fuels in 2025-2029. Comstock is also considering several deals in 2025, including spinning off Comstock Fuels with a subsequent exchange listing.

However, these ambitious plans require capital. The reverse split is supposed to help with that, explained De Gasperis. On the day the letter went out, January 13, Comstock shares nearly halved versus the previous session’s close (January 10), to $0.28 per share.

Since the number of authorized shares will remain unchanged while the number of shares outstanding will decline, the company will be able to sell more shares to new investors, Noble wrote in a report released on Tuesday.

It assigned Comstock an “outperform” rating (equivalent to a “buy”), having been “impressed with the speed at which Comstock has moved its business plans forward.” It did not provide a target price for the stock, however, as it is waiting to see how the company continues to execute on its plans and raise capital.