Stocks of Ashford Hospitality Trust (NYSE:AHT) fell by about 36%, signifying continuation of a bearish trend. AHT hospitality has dropped by over 96% in value in last five years.
A number of reasons can be attributed to the stock including the 1-for-10 reverse stock split done last week. The company came out with preliminary Q2 revenue per available room (RevPAR), which went up three times vis-à-vis last year. Considering the pandemic impact, the numbers are impressive. However, the firm’s RevPAR dropped by 37% vis-à-vis Q2 2019.
The market was perhaps expecting better numbers as pent-up travel demand resulted in augmenting revenue per room. Ashford Hospitality is on uncertain footing, as told by Thomas Niel, fellow at InvestorPlace contributor. The company did avoid bankruptcy as well as negotiate forbearance from the lenders.
Ashford Hospitality Trust, a real estate investment trust, targets investments in upscale hotels. The company’s CEO Rob Hays confirmed on social media that the firm has done split as it cant hold stocks trading below $5. The CEO also confirmed that the low share price is not suitable for trading. Markets sometimes consider reverse stock splits as unsuitable as the company can get its share price up on its own.
Market Reaction:
On Tuesday, AHT stock slumped 35.86% at $2.54 with more than 91.91 million shares, compared to its average volume of 34.86 million shares. The stock had moved within a range of $2.5300 – 3.0700 after opening the trade at $2.81. Over the past 52-week, the stock has been trading within a range of $1.2700 – 8.5100.
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