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Tidal Financial Group to Execute Reverse Stock Split for Defiance Daily Target 2X Short MSTR ETF (Ticker: SMST)

1. Tidal Trust II approved a 1-for-20 reverse stock split for SMST on May 22. 2. The reverse split reduces SMST shares by approximately 95%, adjusting NAV accordingly. 3. SMST targets -2X daily performance of MicroStrategy (MSTR), implying direct price implications. 4. Investors should understand risks, as leverage may lead to significant losses. 5. The split aims to enhance fund accessibility and optimize capital structure.

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FAQ

Why Bullish?

The reverse stock split is designed to enhance investor interest, potentially driving up MSTR indirectly. Similar past actions have often bolstered the visibility and demand for underlying securities in such funds.

How important is it?

The reverse split directly affects the fund that shorts MSTR, which could lead to fluctuating prices based on investor behavior in derivatives linked to MSTR.

Why Short Term?

The immediate market reaction to the split on May 23 could temporarily affect MSTR's price as trading begins.

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MSTRSMST
CHICAGO, May 19, 2025 (GLOBE NEWSWIRE) -- Tidal Financial Group today announced that the Board of Trustees of Tidal Trust II (the “Trust”) has authorized a reverse stock split of the Defiance Daily Target 2X Short MSTR ETF (Ticker: SMST), listed on The Nasdaq Stock Market, LLC. The reverse split is scheduled to take effect after the close of trading on May 22, 2025. Under the terms of the 1-for-20 reverse stock split, every twenty shares of SMST will be consolidated into one share. This adjustment will reduce the number of shares outstanding by approximately 95%. As a result, both the fund’s per-share net asset value (NAV) and opening market price on May 23, 2025, will be adjusted proportionally—approximately twenty times their pre-split values. SMST will begin trading on a split-adjusted basis when markets open on May 23, 2025. This action is designed to optimize the fund’s capital structure and enhance its accessibility to a broader base of investors. While the number of shares held will change, the total dollar value of an investor’s holdings will remain unaffected. For instance, an investor holding 1,000 shares at a NAV of $10 before the split will own 50 shares at a NAV of $200 after the split—retaining the same $10,000 investment value. The Trust’s transfer agent will work with the Depository Trust Company (DTC) to facilitate the necessary adjustments to shareholder accounts. Fractional Shares and Tax Considerations Some shareholders may hold positions that result in fractional shares following the reverse split. In such cases, investors may receive cash in lieu of fractional shares, depending on the policies of their brokerage firms. These transactions may carry tax implications. Shareholders are encouraged to consult their tax professionals for individual guidance. There will be no transaction fees associated with cash redemptions for fractional shares. The Defiance Daily Target 2X Short MSTR ETF (the “Fund”) seeks daily leveraged investment results of -2X (-200%) the daily percentage change in the share price of MicroStrategy Incorporated (Nasdaq: MSTR) (the “Underlying Security” or “MSTR”). Because the fund seeks daily leveraged investment results, it is very different from most other exchange-traded funds.  The Fund is not suitable for all investors. The Fund is designed to be utilized only by knowledgeable investors who understand the potential consequences of seeking 200% daily inverse (-2X) investment results, understand the risks associated with the use of leverage, and are willing to monitor their portfolios frequently. The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. An investor could lose the full principal value of his/her investment within a single day. The Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus and summary prospectus contain this and other important information about the investment company. Please read the prospectus and / or summary prospectus carefully before investing. Hard copies can be requested by calling 833.333.9383. Investing involves risk. Principal loss is possible. SMST is distributed by Foreside Fund Services, LLC.

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