SINGAPORE - LightInTheBox Holding Co., Ltd. (NYSE: LITB), a global apparel e-commerce retailer, has announced a forthcoming change in the ratio of its American depositary shares (ADS) to ordinary shares. The adjustment will increase the ratio from one ADS representing two ordinary shares to one ADS for twelve ordinary shares. This change is scheduled to take effect on or about September 5, 2024.
For holders of the company's ADS, this modification will act similarly to a one-for-six reverse ADS split. Following the effective date, investors will be required to exchange six current ADSs for one new ADS. The Bank of New York Mellon (NYSE:BK), serving as the depositary bank for LightInTheBox's ADS program, will oversee the exchange process. The company's ADSs will continue to trade on the New York Stock Exchange under the ticker "LITB," with a new CUSIP number of 53225G201 post-change.
No new fractional ADSs will be issued as part of this change. Instead, fractional entitlements will be sold, and the net cash proceeds, after applicable deductions, will be distributed to the ADS holders by the depositary bank. The adjustment will not affect the company's underlying ordinary shares; no shares will be issued or canceled in connection to the ADS Ratio Change.
The company anticipates that the trading price of its ADSs may proportionately increase upon the change's implementation, although there is no assurance that the post-change trading price will be equal to or exceed six times the price before the adjustment.
LightInTheBox specializes in delivering a diverse range of comfortable and visually appealing apparel to consumers worldwide, particularly targeting middle-aged and senior demographics. The company operates through its websites and mobile applications, available in over 20 languages across more than 140 countries and regions.
This announcement is based on a press release statement and contains forward-looking statements subject to risks and uncertainties. LightInTheBox does not commit to updating any forward-looking statement as required by law.
In other recent news, LightInTheBox reported a net income of $0.6 million for Q2 2024, marking a significant shift from the net loss the company experienced in the same period of the previous year. Despite a challenging environment with increased competition and traffic acquisition costs, the company managed to improve its gross margin to 62.4%, up from 57.5% the previous year. However, total revenues saw a stark decrease, down 64% year-over-year to $69 million.
In response to these recent developments, LightInTheBox remains committed to enhancing operational efficiency and profitability. The company's strategic adjustments have been successful in driving product upgrades and leveraging supply chain advantages, as reflected in the improved gross margin.
LightInTheBox plans to continue refining its product quality and differential strategy to sustain momentum. The company's focus on strengthening localized operations is aimed at effectively targeting customers and building brand loyalty, despite the highly competitive nature of the global e-commerce market.
InvestingPro Insights
In the wake of LightInTheBox Holding Co., Ltd.'s (NYSE: LITB) announcement regarding the change in the ratio of its American depositary shares (ADS), investors may be seeking additional insights to gauge the company's financial health and market position. According to InvestingPro data, LightInTheBox holds a market capitalization of $49.43 million. Despite the company's impressive gross profit margin of 58.54% for the last twelve months as of Q2 2024, it has experienced a significant revenue decline of 30.24% during the same period.
Investors should note that LightInTheBox's stock has been subject to high price volatility, as indicated by the 37.04% drop in its 1-month price total return and the 66.57% decrease in its 1-year price total return as of 2024. These figures underscore the potential risks associated with investing in the company's shares. Additionally, the InvestingPro fair value estimate for LITB stands at $0.51, suggesting a potential undervaluation based on the previous close price of $0.44.
For those considering an investment in LightInTheBox, two InvestingPro Tips may be particularly relevant:
- The company holds more cash than debt on its balance sheet, which could provide a buffer against financial challenges.
- LightInTheBox is trading at a low revenue valuation multiple, which might appeal to value investors looking for potentially undervalued opportunities.
Interested parties can find a total of 12 InvestingPro Tips for LightInTheBox, which offer a comprehensive analysis of the company's financial metrics and market performance. These tips are available through InvestingPro's platform and can serve as a valuable resource for investors looking to make informed decisions.
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