Reverse stock split impact on share price - Business, Finances and Investing Forum

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Reverse stock split impact on share price

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11-14-2018 , 07:34 PM

Marc14

grinder

Join Date: Dec 2007 Posts: 461

Hi everyone,

I am completely new to trading, and stocks, and I am considering buying stock in a company that may be considering a reverse stock split sooner rather than later. Is there any rule of thumb regarding how this will impact the share's price? Generally speaking, should I buy before or after the reverse split?

The idea behind the split is to uplist.

Thanks!

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11-15-2018 , 02:00 AM

rand

Pooh-Bah

Join Date: Feb 2007 Posts: 4,137

You should be able to find a good answer and resources through google. But it basically shouldn't affect anything.

You've got one share at 100, now two at 50, or the reverse.

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11-15-2018 , 09:49 AM

unfrgvn

old hand

Join Date: Jan 2004 Posts: 1,850

In a vacuum, if you buy 100 shares at $1 and there is a 4 to 1 reverse split, you will now own 25 shares at $4. Obviously the market may reprice the shares based on the news of the split.
I can't think of one company that ever did a reverse split that is worth anything, but I could be wrong.

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11-15-2018 , 10:21 AM

calmasahinducow

old hand

Join Date: Jan 2005 Posts: 1,807

It can create some interesting short term trading situations, especially if short interest is high.

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11-18-2018 , 12:50 PM

JoshSp

newbie

Join Date: Feb 2013 Posts: 48

Salesforce and Citigroup have both done reverse splits.

I'm also interested in this topic as one of my OTC stocks recently announced they may do one in order to uplist as well. The short interest is a concern (as another poster mentioned). I'm also concerned that the next step could be dilution but hopefully that is not what the CEO has in mind. Other than those two issues (and maybe perception), as others have said, the market cap doesn't change so it shouldn't be a big deal. Having said that, the stock I'm talking about tanked significantly after that announcement became public.

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11-18-2018 , 08:36 PM

Marc14

grinder

Join Date: Dec 2007 Posts: 461

Quote:

Originally Posted by JoshSp

Thanks Josh. I asked around on my end and the general consensus was that if the reverse split is not combined with some solid good news that it's perceived negatively... I know it's not much but thought I would share.

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