Why Ashford Hospitality Trust Is Trading Lower Today

Ashford Hospitality Trust Inc AHT is trading significantly lower Tuesday morning after the company announced a 1-for-10 reverse stock split. 

As of the effective date on July 16, each share of the Ashford Hospitality Trust's outstanding common stock will be automatically converted into 1/10 of a share of the company's common stock. The common stock is expected to begin trading on the split-adjusted basis on July 19.

Ashford Hospitality Trust cited the following reasons for the reverse stock split:

• To increase the price-per-share above the $5 threshold required by many institutions to hold shares.
• Some brokers limit the ability or increase the cost to margin a stock under $5 per share.
• Current options trading is less attractive due to limited applicable strike prices.
• There are high transaction costs as a percentage of Ashford Hospitality Trust's stock price commissions.

"The company is committed to making owning Ashford Trust's common stock as shareholder friendly as possible, and we believe implementing a reverse stock split is another important step for the Company and its stockholders to optimize our position," said Rob Hays, president and CEO of Ashford Hospitality Trust.

See Also: Understanding Ashford Hospitality Trust's Unusual Options Activity

AHT Price Action: Ashford Hospitality Trust has traded as high as $8.51 and as low as 55 cents over a 52-week period.

At last check Tuesday, the stock was down 27.27% in premarket trading at $2.88.

Image by Dim Hou from Pixabay.