• The company said that for every 20 shares that are outstanding or held as treasury stock, one share of common stock will be issued. 
• About 725 million shares total outstanding shares will be converted into 36 million shares post the reverse split.
• The company’s top and bottom lines have not improved even after Delta Air Lines came to its rescue in 2023.

Shares of private-flight operator Wheels Up Experience Inc. (UP) tumbled 10% on Tuesday after the company said it would effect a reverse stock split to meet the NYSE’s listing conditions.

The company said that for every 20 shares that are outstanding or held as treasury stock, one share of common stock will be issued. 

The stock will begin trading on a reverse-split-adjusted basis on April 27. The company believes the move will also make it eligible for inclusion in the Russell 3000 index.

“As part of the Delta-led investment in 2023, we issued more than 670 million shares to our lenders, leaving the company with a much higher share count than many of our peers. Today's announcement allows us to realign our share count and remain focused on sustainable, profitable growth and our differentiated, customer-first business model," said CEO George Mattson.

Post reverse split, the company’s 725 million shares will be reduced to 36 million shares.

Struggling With High Operating Costs

Even after Delta Air Lines threw in a $500 million rescue package in 2023 for a significant equity stake, Wheels Up has only seen its revenue decline since then. 

Notably, the company has not turned a profit in at least eight years, as it continues to struggle with very high operating costs and a drop in active members using the service.

How Did Retail Traders React?

On Stocktwits, retail sentiment turned ‘bullish’ from ‘bearish in the last 24 hours, while messaging volumes have remained ‘normal.’

Since going public via a SPAC deal back in 2021, the stock has lost over 94% of its value. Year-to-date, UP stock is down 25%.

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