Shares of real estate investment trust (REIT) Ashford Hospitality Trust (NYSE: AHT) rose roughly 13% in early trading on July 29. At 2 p.m. EDT they were still higher by roughly 10%, so they have managed to hold on to much of their earlier gain. The reason for the advance was most assuredly the company's earnings release, which came after the market closed on July 28. It was, on the surface, very good reading. But there's a wrinkle here that can't be ignored.
The hotel REIT reported revenue of $193.4 million in the second quarter of 2021, up nearly 350% from the $43.1 million it generated in the same stanza of 2020. That's an incredible improvement, to say the least. Adjusted funds from operations (FFO) came in at $0.04 per share, up from an adjusted FFO loss of $123.22 per share in the second quarter last year. There was a 1-for-10 reverse split enacted on July 16, which makes the per share numbers, perhaps, a little more dramatic than you might expect. However, the reverse split actually hints at the bigger problem, despite the obvious improvement in the REIT's results.
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Why Ashford Hospitality Trust Stock Rallied as Much as 13% Today