You might have noticed that the Hot Chili Ltd (ASX: HCH) share price was burning hot last week — or was it?
Market watchers saw the copper developer’s share price seemingly surge a massive 4,455.5% last Friday. It increased from 4.5 cents to $2.05 in a single session. But that was just an illusion.
The company recently completed a large share consolidation, decreasing the number of shares it has outstanding at a ratio of 50:1, rounded up to the nearest full number. Thus, the value of each share increased about 50 times over.
However, the last 2 sessions have seen the company’s stock in the red.
At the time of writing, the Hot Chili share price is back to $2.02, having fallen 4.6% yesterday and another 1.46% today. This is despite no news being released by the company.
For context, the S&P/ASX 200 Index (ASX: XJO) dropped 0.6% yesterday and is flat at the time of writing today. Meanwhile, the All Ordinaries Index (ASX: XAO) fell 0.7% yesterday and is currently sporting a 0.13% dip.
What’s going on with the Hot Chili share price?
Hot Chili reduced its outstanding shares ahead of its plan to list on the Canadian venture stock exchange (TSXV).
By having fewer shares outstanding, the company states it has a more effective capital structure and appropriate share price ahead of its dual listing.
At the end of the consolidation, the company had about 87.5 million outstanding shares, down from approximately 4.4 billion.
As a result, the Hot Chili share price is far higher than it was a fortnight ago. Though, the company’s market capitalisation remains relatively unchanged at 176.85 million.
In October, Hot Chili said it was on track to debut on the Canadian exchange before the end of 2021. Its new share price puts it in a similar position as its TSXV-listed peers.
However, the company hasn’t released any word to explain its stock’s recent tumble. In fact, the last time the market heard price sensitive news from Hot Chili was 1 November when it provided an update on its activities over the September quarter.
Right now, the Hot Chili share price – adjusted after the consolidation – has fallen 3.8% year to date. It has also dropped 14% over the past 30 days.