FOXO Technologies’ Reverse Stock Split: A Technical Fix, Not a Fundamental Fix

The completion of FOXO Technologies Inc.’s 1-for-10 reverse stock split on April 28, 2025, marks a critical but cautionary milestone for the micro-cap firm. While the move temporarily averted delisting from the NYSE American exchange, it underscores the company’s precarious financial position and raises serious questions about its long-term viability. This analysis dissects the implications of the split, the underlying risks, and what it reveals about the state of small-cap equities in today’s markets.

Ask Aime: How will Foxo Technologies' reverse split impact its future on the NYSE American?

The Mechanics of Survival
The reverse split reduced FOXO’s outstanding shares from 38.7 million to 3.87 million, lifting its stock price from $0.0841—below the NYSE’s $0.10 minimum—to $0.841 post-split. While this narrowly met the exchange’s requirements, the stock remains classified as a penny stock (trading below $1), a status that often deters institutional investors and raises regulatory scrutiny. The company’s market capitalization now stands at just $2.69 million, a figure so small it places FOXO among the smallest listed entities on major exchanges. For context, the average U.S. public company has a market cap exceeding $2 billion.

A Technical Adjustment, Not a Strategic Turnaround
The reverse split was explicitly framed by the company as a “technical adjustment” to maintain listing eligibility, not a reflection of improved fundamentals. Shareholders approved a ratio range of 1-for-5 to 1-for-100 in November 2024, but the board chose the mildest possible ratio—1-for-10—to avoid disproportionately diluting ownership. This decision highlights the company’s fragility: a larger split could have pushed the stock price higher but would have diluted shareholders further, potentially triggering more investor skepticism.

Critically, the split did nothing to address FOXO’s core challenges. The company’s minimal market cap suggests it operates in an industry with razor-thin margins or unproven technology. Without clear revenue growth or operational improvements, the reverse split merely buys time before the next crisis—a potential liquidity crunch or another regulatory hurdle.

The Penny Stock Paradox
Remaining a penny stock post-split is a significant drawback. Penny stocks are often associated with volatility, low liquidity, and higher risk of fraud. NYSE rules require a $0.10 minimum bid price to stay listed, but many investors avoid stocks trading below $1 due to restrictions on margin trading and lending. This creates a liquidity trap: the lower the price, the fewer the buyers, exacerbating downward pressure.

FOXO’s situation mirrors a broader trend. Micro-caps with market caps under $50 million have underperformed the broader market in recent years, with many relying on reverse splits to stave off delisting. A 2023 study by the NYSE found that 68% of companies undergoing reverse splits underperformed the S&P 500 over the next 12 months, with 30% eventually delisted within three years.

Conclusion: A Pyrrhic Victory
FOXO’s reverse split was a necessary procedural move but a hollow victory. With a market cap of $2.69 million—a fraction of even the smallest NYSE-listed firms—the company remains highly vulnerable to external shocks, regulatory changes, or shifts in investor sentiment. The stock’s post-split price of $0.841 is still 16% below the $1 threshold that would attract broader institutional interest, leaving it in penny stock limbo.

Investors should treat this move with skepticism. The reverse split solved no operational issues and did not unlock new capital. Instead, it merely delayed the inevitable reckoning with the company’s lack of scale and profitability. For now, FOXO’s survival hinges on external factors—like a sudden industry boom or a strategic buyer—rather than its own strengths. In the world of public equities, technical fixes like reverse splits are life support, not life insurance.

The data is unequivocal: companies with such tiny market caps face overwhelming odds. Until FOXO demonstrates sustainable growth or a credible business plan, its stock remains a high-risk gamble, not an investment.