Why Is AIXI Stock Crashing Premarket Today?

• The ADS change will be effective on or about May 11, Xiao-I said.
• The company also said that it will continue trading on the Nasdaq under the “AIXI” ticker after the change. 
• The plunge comes just a few weeks after the company recorded a dramatic rally of more than 515% in a single session after winning a significant legal battle against Apple.

Shares of Xiao-I Corp. (AIXI) plummeted by over 33% in Friday’s market trading after the company announced earlier that it plans to change the ratio of its American Depositary Shares, resulting in a one-for-twenty reverse ADS split.

AIXI stock was the top loser among all U.S. stocks in the premarket session at the time of writing.

The plunge comes just a few weeks after the Shanghai-based company recorded a dramatic rally of more than 515% in a single session.

Ratio Change Explained

The Chinese AI company said that the ADS change would lead to an adjustment from one ADS representing one-third of an ordinary share to a new ADS ratio resulting in one ADS representing 60 ordinary shares.

The ADS change will be effective on or about May 11, Xiao-I said, adding that it will continue trading on the Nasdaq under the “AIXI” ticker.

The company also said that uncertified ADS holders in the Depository Trust Company (DTC) will have their shares automatically adjusted by the depositary bank, Citibank, N.A. Meanwhile, any fractional shares will be aggregated and sold, with net proceeds distributed after fees.

AIXI’s Win Against Apple

In March, the company won a significant legal battle against Apple Inc. (AAPL) after China’s Supreme People's Court rejected the iPhone maker’s attempt to invalidate a core patent AI technology used in Siri.

The ruling strengthened Xiao-I's position in an ongoing patent infringement lawsuit. Xiao-I alleged that Apple’s Siri voice recognition technology infringes on a patent it applied for in 2004 and was granted in 2009. Xiao-I is seeking about $1.43 billion in damages in the patent infringement lawsuit.

What’s Retail Saying?

On Stocktwits, retail sentiment around AIXI stock plunged to ‘bearish’ territory from ‘bullish’ just a week ago. Meanwhile, message volumes jumped from ‘low’ to ‘high’ territory over the past 24 hours.

One user called the share price plunge a “classic reverse split reaction.”

Another bullish user warned against selling in “panic mode,” noting that Apple’s settlement amount was still due.

AIXI shares have fallen more than 70% in the last one year.

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