How will the ADS-to-Class A share conversion ratio affect the liquidity and pricing of QH's shares on NASDAQ? | QH (Aug 20, 2025) | Candlesense

How will the ADS-to-Class A share conversion ratio affect the liquidity and pricing of QH's shares on NASDAQ?

The conversion‑ratio change directly alters the “share‑per‑ADS” denominator that the market uses to price QH’s NASDAQ‑listed ADS. If the company moves to a higher‑ratio (e.g., 1 ADS = 10 Class A shares instead of the current 1 ADS = 5), each ADS will represent more underlying equity, so the total number of ADSs on the exchange falls. The float shrinks, which typically tightens bid‑ask spreads and makes the remaining ADSs more “premium”‑priced – the per‑ADS price will rise, but the overall market‑cap remains roughly unchanged because the underlying equity value is unchanged. The reduced float can also boost short‑selling costs and raise the cost of borrowing, which may deter some speculative activity and increase the “holding‑cost” premium for long positions.

Conversely, a lower‑ratio (e.g., 1 ADS = 2 Class A shares) expands the ADS float, boosting daily volume and depth on the order book. Liquidity improves, spreads narrow, and the per‑ADS price will fall proportionally to the smaller claim on the equity pool, making the stock more accessible to retail and algorithmic traders. The larger float can also attract more institutional participation, but the lower price may invite higher volatility as the market digests the new supply dynamics.

Trading take‑aways

- Watch the ratio announcement details: a move that cuts the float will likely trigger a short‑term price‑upward bias and tighter spreads; a move that expands the float will create a price‑down adjustment and higher turnover.

- Position ahead of the change: if the ratio will increase, consider a modest long position to capture the premium; if it will decrease, a short‑side or a “sell‑high‑buy‑low” swing may be appropriate as the ADS price normalises.

- Monitor post‑conversion order flow and spread compression: the new liquidity profile will be evident in the first 1‑2 weeks of trading, offering opportunities to trade on the emerging supply‑demand imbalance.