The stock market has been on edge for months, and investors haven’t gotten a lot of respite in the downdraft that has taken major market benchmarks lower enough to trigger official bear markets. Yet at least on Tuesday, it appeared market participants were a bit more upbeat about the potential for the global economy to withstand inflation, higher interest rates, and other pressures. As of 7 a.m. ET, futures on the Dow Jones Industrial Average (DJINDICES: ^DJI) had risen 498 points to 30,367. S&P 500 (SNPINDEX: ^GSPC) futures had gained 69 points to 3,745, and Nasdaq Composite (NASDAQINDEX: ^IXIC) futures had picked up 218 points to 11,515.
Shopify (NYSE: SHOP) is moving forward with a stock split in just over a week that has been in the works for a while now, and investors are hoping that the move will help the shares recover from a steep plunge from their recent highs. Meanwhile, though, many investors turned their attention for the first time to shares of a tiny Nasdaq-listed stock, which got some interest from a leading pharmaceutical giant.
The Shopify split is about to happen
Shopify shareholders recently approved a 10-for-1 stock split. With the meeting vote having been the last obstacle before the company could move forward, the schedule that the e-commerce platform provider adopted was relatively quick.
A couple of key dates are coming up. The record date for the stock split will be Wednesday, June 22, which is officially the day on which investors have to be shareholders of record in order to receive the additional shares. However, because of some technicalities, shares will continue to trade at their pre-split levels slightly beyond that date.
The important date for investors is the payment date, which is when the additional shares from the split will go to investors. That will happen after the market closes on Tuesday, June 28. When trading starts the following day on Wednesday, June 29, Shopify stock will trade at post-split levels of roughly one-tenth their pre-split price.
It’s odd to see a stock split after a decline of more than 80%. Investors, however, hope that the company’s optimism will translate into longer-term success in time.
Valneva gets a big investment
The big winner in the stock market early Tuesday, however, was Valneva (NASDAQ: VALN). The French company is a developer in the vaccine market, and it got some much-wanted attention from an industry giant that sent its stock up more than 80% in premarket trading.
Valneva announced on Monday that Pfizer (NYSE: PFE) had agreed to update the terms of its collaboration and license agreement concerning Valneva’s VLA15 vaccine candidate for Lyme disease. Under the deal, Pfizer will enter into a new equity subscription agreement to invest $95 million in exchange for an 8.1% stake in Valneva’s stock. That prices shares at 9.49 euros per share, which interestingly is below even where the stock closed on Friday, let alone where it climbed early Tuesday.
Some minor changes also adjust potential payouts. Valneva will now be on the hook for 40% of shared development costs rather than 30%, and royalties could be less attractive, with tiers ranging from 14% to 22% rather than the 19% starting tier in the initial agreement. However, milestone payments of up to an additional $100 million could go to Valneva if the treatment is successful.
Lyme disease has no known vaccine currently, so a successful set of trials for VLA15 could be huge for the hundreds of thousands of people across North America and Europe who contract the disease each year. Shareholders hope that Pfizer’s big investment means Valneva is close to a breakthrough in preventing the disease from hurting more people.
Dan Caplinger has positions in Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.