Nasdaq’s stock has been affected by a loophole that allowed a software firm to go public even when it did not have all the requirements to be listed. According to the Wall Street Journal, companies must have at least a million publicly held shares before they are allowed to go public.
The company is Phunware Inc and in order to be listed, it merged with a blank-check company that was already listed on Nasdaq. Due to the fact that the firm made only 144,000 shares available on the exchange, the share price climbed 3,750 in just six days.
Phunware Chief Executive Alan Knitowksi explained that if there is an imbalance in supply and demand, these things can happen in the market.
About it, Knitowski said:
“If you have a supply-demand imbalance because all the other shares are locked up for six months and the warrants are un-exercisable, you can see these kinds of things happen.”
Joe Christinat, a Nasdaq spokesman explained that they would be proposing an update to the exchange’s rules that would prevent restricted shares from counting into the number of held shares. This, a firm such as Phunaware would not be ready to be launched and this situation would not happen again.
The company is also related to the virtual currency market. The firm aims at launching a virtual currency dedicated to social media. This would allow users to be compensated for the information they provide. Online marketers and third parties will be able to purchase the information provided by the users.
Back in December 2017, when virtual currencies and the whole market was reaching all-time highs, several companies changed their names and added the word “blockchain.” This allowed the stocks of these firms to spike during the next trading hours.
According to Bloomberg, Long Island Iced Tea has experienced this situation when it changed its name to Long Blockchain. Some firms that implemented this strategy had to pay a fine.