BARK's Reverse Split Gamble: Can It Save Its Stock?

BARK, Inc. (NYSE: BARK), the popular dog-focused brand behind BarkBox and Super Chewer, faces an urgent challenge after the New York Stock Exchange (NYSE) warned it of non-compliance with its listing standards. The issue stems from BARK's stock price averaging below $1.00 over 30 consecutive trading days—a threshold that could trigger delisting unless met. With a six-month cure period, BARK is considering a reverse stock split as its primary solution. But is this move a lifeline or a risky gamble for investors?

The Reverse Split: A Desperate Move or Strategic Play?

A reverse stock split involves reducing the number of shares outstanding while proportionally increasing the stock price. For example, a 1-for-5 reverse split would turn every five shares into one, boosting the price fivefold. BARK's proposal aims to lift its stock above the $1 threshold, allowing it to retain its NYSE listing. But the move carries significant risks and implications.

The Case for the Reverse Split

• Listing Survival: The NYSE's $1 minimum price requirement is non-negotiable. Without a reverse split or a sudden price surge, delisting is inevitable, which could lead to a sharp drop in liquidity and investor confidence.
• Signaling Confidence: Executing a reverse split might signal management's belief in the company's long-term value. For BARK, which generates recurring revenue through subscriptions and retail partnerships, this could reassure investors that the business model remains intact.

The Risks and Drawbacks

• Shareholder Approval: The split requires shareholder approval, which isn't guaranteed. Skeptics might see it as a stopgap rather than a solution to underlying issues.
• Perceived Weakness: A reverse split often carries a stigma, viewed as a last resort for struggling companies. This could deter new investors and depress stock performance post-split.
• Volatility: Even if approved, the split could create short-term volatility. The stock might gap higher initially but face downward pressure if fundamentals don't improve.

Data-Driven Context: BARK's Stock Performance

To understand the gravity of BARK's situation, let's look at its stock trajectory. Over the past year, BARK's shares have been in a free fall, driven by macroeconomic pressures and investor skepticism about its subscription-based model.

The stock's average closing price fell below $1.00 starting in early 2025, a trend exacerbated by weak consumer spending and competition in the pet industry. For context, competitors like Chewy (CHWY) and Petco (WOOF) have also faced stock challenges but remain above the NYSE threshold. BARK's lack of pricing power and reliance on discretionary spending may have amplified its struggles.

According to historical data from 2022 to 2025, stocks that breached critical support levels like BARK's current $1 threshold experienced an average return of -15.78%, with 110 such instances. This underscores the heightened delisting risks and underperformance associated with such breaches, aligning with BARK's current predicament.

Alternatives to the Reverse Split

While the reverse split is BARK's stated priority, other options exist—though none are without hurdles:1. Stock Buybacks: Purchasing shares to boost the price. However, BARK's cash reserves ($125M as of Q1 2025) might limit this option without diluting equity.2. Business Turnaround: Accelerating growth in high-margin segments like BARK Air or expanding international markets. Yet, such efforts require time and execution—a luxury the six-month cure period may not afford.3. Merger or Acquisition: A takeover could provide immediate liquidity but would likely come at a discount to current valuation.

Investor Considerations: Weighing the Pros and Cons

For investors, the decision hinges on two factors: BARK's ability to execute the reverse split and its underlying business health.

• Pro Reverse Split: If the split passes and the stock stabilizes above $1.00, BARK's NYSE listing could attract institutional investors who avoid over-the-counter markets. Additionally, BARK's diversified revenue streams (subscriptions, retail, travel) offer a sustainable model if scaled efficiently.
• Anti Reverse Split: The move might not address the root causes of BARK's stock decline, such as weak revenue growth or margin pressures. A post-split price rally could be short-lived without operational improvements.

What's Next for Investors?

• Monitor Shareholder Approval: The vote's outcome is critical. A rejection would leave BARK scrambling for alternatives, likely worsening its stock.
• Track Business Metrics: Watch for signs of growth in subscription retention rates, gross margins, or new market expansion. These could indicate whether BARK's fundamentals justify the split's optimism.
• Consider the Risk/Reward: Buying BARK before the reverse split could be a high-risk, high-reward bet. The stock's valuation (P/E of ~15x forward earnings) suggests limited downside if the split succeeds, but delisting could erase gains.

Conclusion: A Hail Mary or a Calculated Move?

BARK's reverse stock split is a necessary gamble to avoid delisting, but it's far from a guarantee. Investors must decide whether they believe in management's ability to navigate this crisis and sustain growth. While the NYSE listing is vital for credibility, BARK's long-term success depends on its execution in a crowded pet market. For now, the stock's fate hangs on both the split's approval and the company's ability to deliver on its fundamentals.

In the end, BARK's story is a microcosm of the challenges facing small-cap companies with volatile stock prices. Investors should proceed cautiously, treating the reverse split as a stopgap rather than a solution—and always keep an eye on the dogs.