AUSTIN, TX - Digital Brands Group, Inc. (NASDAQ:DBGI), a diversified portfolio of luxury lifestyle brands with a current market capitalization of just $3.83 million, announced a 1-for-50 reverse stock split scheduled to take effect on December 13, 2024. The move aims to bring the company's stock back into compliance with Nasdaq's minimum bid price requirement, following a steep 97% decline in share price over the past year. InvestingPro analysis reveals concerning financial health indicators, with 13 key risk factors identified in their comprehensive Pro Research Report.
The company's shares will continue to trade on the Nasdaq Capital Market under the ticker symbol DBGI but will begin trading on a split-adjusted basis at the market's opening on the date of the reverse split. The common stock's new CUSIP number post-split will be 25401N507. According to InvestingPro data, the company operates with a concerning debt-to-equity ratio of 492% and a current ratio of 0.29, indicating potential liquidity challenges.
Hil Davis, CEO of Digital Brands Group, stated that the reverse stock split is a strategic step towards maintaining the company's listing on the Nasdaq exchange. He emphasized the importance of this move in the context of the company's long-term plans and compliance with market requirements.
The press release also contained forward-looking statements regarding the company's expectations and beliefs about future events that could impact DBG's performance. These statements were identified by the use of words such as "will," "anticipate," "estimate," and "expect," indicating their predictive nature. However, the company also cautioned that these statements are not guarantees and actual results could materially differ.
Potential risks and uncertainties that could influence DBG's operational and financial outcomes include public health crises, consumer demand fluctuations, distribution disruptions, competitive pressures, and the ability to respond to changing fashion and consumer trends, among others. Financial metrics from InvestingPro highlight additional challenges, including a 33% year-over-year revenue decline and rapid cash burn rate. For deeper insights into DBGI's financial health and future prospects, investors can access the detailed Pro Research Report, which provides comprehensive analysis of these and other critical metrics.
Digital Brands Group has a business model that originated as a digitally native-first vertical brand and focuses on capturing a greater share of the customer's closet by leveraging data and purchase history to create personalized content.
This announcement is based on a press release statement from Digital Brands Group, Inc.
In other recent news, Digital Brands Group has been navigating significant developments. The company recently received approval for a reverse stock split and re-elected its board of directors. Amidst financial challenges, this strategic move allows a split ratio ranging from 1-for-10 to 1-for-50, at the board's discretion.
Simultaneously, the company faces potential delisting from the Nasdaq Stock Market due to non-compliance with minimum stockholders’ equity requirements. Despite this, recent transactions have temporarily raised its stockholders' equity above the $2.5 million threshold.
In financial updates, Digital Brands Group reported a decrease in net revenue to $2.4 million in its third quarter 2024 earnings call, primarily due to the discontinuation of a low-margin wholesale account. However, the company's net loss improved to $3.5 million from $5.4 million year-over-year. The company also anticipates a $4.5 million earnings boost in 2025 from non-cash expenses and a $3.1 million reduction in interest expenses.
The company has signaled a strategic shift from debt reduction to growth initiatives, planning to enhance digital marketing, expand sales on Amazon (NASDAQ:AMZN) and TikTok, and launch influencer campaigns. These are recent developments, reflecting Digital Brands Group's efforts to maintain financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.