Tilray Brands Inc. (TLRY) shares took a hit Wednesday evening after the cannabis company announced it's moving forward with a reverse stock split that will dramatically reduce its share count.

The Split Details

After markets closed Wednesday, Tilray revealed it will implement a one-for-10 reverse stock split of its common stock. The move, which was approved by stockholders at a special meeting back in June, is set to take effect on December 1.

Here's how it works: on the effective date, every 10 issued and outstanding shares of Tilray common stock will be automatically combined and converted into one share. If you own 100 shares today, you'll wake up with 10 shares instead. The proportional value stays the same, but the share count and price adjust accordingly.

Why Do This?

According to Tilray, the reverse split serves multiple strategic purposes. The company wants to align its shares outstanding with companies of similar size and scope, making it more comparable to peers. There's also a practical appeal: reducing share count can make the stock more attractive to institutional investors, many of whom have minimum price requirements for investments.

There's a financial benefit too. Tilray expects the stock split to generate up to $1 million in cost savings on an annual basis by reducing expenditures associated with the company's annual meetings and related administrative work.

Shares of Tilray will begin trading on a split-adjusted basis when markets open on December 2.

Market Reaction

Investors weren't exactly thrilled with the news. Tilray shares were trading down 9.72% in after-hours activity, sitting at 93 cents at the time of publication Wednesday.