Some investors may have spotted what looks like an incredibly lucrative ASX share this morning.
Several sources, including the ASX itself, are today telling investors that the Clean TeQ Holdings Limited (ASX: CLQ) share price is up an incredible 927%. It's not often we see an ASX share price move triple digits in one day, let alone by close to 1,000%
So did Clean TeQ really make its investors 927% richer today? The answer is not as simple as it seems…
So yes, on the surface, it looks as though Clean TeQ shares are up 927%. That's because when we last saw the Clean TeQ share price on Friday, it was sitting at 26 cents a share. But this morning, it had seemingly had one of the greatest weekends of all time when it opened at $2.65 a share.
At the time of writing, Clean TeQ shares are trading at $2.67.
Image source: Getty Images
A 'reverse split' for Clean TeQ
If you are a shareholder in Clean TeQ, I hope I've caught you before you've found a way to the nearest Lamborghini dealer because I'm afraid you're not suddenly rich.
The 'rise' in the Clean TeQ share price has nothing to do with the company getting any bigger. It's actually a result of Clean TeQ executing what's known as a share consolidation, which is sometimes called a 'reverse split'.
Put simply, the company has reduced its share count by a factor of 10, making each share 10 times more valuable. That explains why Clean TeQ has seemingly 10Xed over the weekend. But for every 10 CLQ shares a shareholder might have owned on Friday, they now own 1.
It's the opposite process to what companies like Pushpay Holding Ltd (ASX: PPH), Apple Inc (NASDAQ: AAPL) and Tesla Inc (NASDAQ: TSLA) have done in recent months. Unfortunately for shareholders, it does not mean any real change in either the company's market capitalisation, valuation, or any individual shareholders' wealth.
Clean TeQ did tell us this was happening last Wednesday. It's part of the company's plan to rename itself Sunrise Energy Metals Limited (SRL) come 9 April 2021.
