Posted on 09/27/2024 9:47:56 AM PDT by MeneMeneTekelUpharsin
This stockholder, for the first time I have EVER seen in my life, shows an alledged behind the scenes corruption on the part of directors of a company to do a reverse split of shares to stay financially viable instead of actually cleaning up their act and trying to become profitable. This has probably been the case with many stocks that have gone through reverse splits, but THE CORRUPT MEDIA DOES NOT DO ANY INVESTIGATIVE TRUTH REPORTING ANY MORE!!!
I experienced my first reverse split this summer, I’ve been an equity trader for over 30 years and never saw one before.
GE was a big one.
Reverse splits keep firms from being delisted from an exchange or from being boycotted by investment houses who do not invest in stocks below a low level also.
The reverse splits annihilate employees with restricted stock or plans tied to options.
The exchanges have listing requirements. If the stock trades under $1 for a period of time they will get delisted. So a reverse split can be beneficial to keep your listing. But yes, there are plenty of scams. Some companies won’t make money for a long time - experimental drug companies for example that don’t have a product to sell. But sure there is a superficial aspect to it too. Penny stocks look, well, worthless. So they try to make it look more important.
Some companies issue too many shares and if they aren’t making money they drop a lot in value obviously. A reverse split will reduce the share count making it more scarce.
GE was a big one.
Very few companies do well after Reverse splits.
GE did it for a different reason. GE wanted to Condense stock so the company itself could ‘split’ into GE health, GE power, and GE.
This is the only ‘reverse split’ that I haven’t pulled money out of the company when it happened. GE has done well since, but it’s usually a sign of bad management and poor finances.
The reason most companies do reverse splits is so they don’t get de-listed and end up on the pink sheets.
GE was one of the biggest recently to have to do that. They’ve now split the company 3 ways, and the hope is that a couple of the companies will survive.
J&J did their split off while the stock still had some value. I understand they weren’t able to shift the liability the way they wanted to, but it was better than the stockholders losing everything down the road if they end up in bankruptcy.
The reverse splits don’t deprive anyone of value; if anything it helps keep the stock liquid enough that people can bail if they decide that is their best option. And with currrent low cost brokerage set ups, you can shop around and not have to pay large premiums to trade odd lots. That used to be the big disadvantage to reverse splits - it would cost you more to unload 20 share than 100. Now you can even trade fractional shares some places (although I’ve never been on the reciving end of a reverse split where I’ve gotten a fractional).
GE’s terrible management and looting is a couple of decades back at this point. Their big problem (last time I looked) was the unfunded pension liability. I figure at least two of the three companies will survive. I agree with your post - a reverse split generally just postpones the inevitable.
Just looked at some numbers - looks like Healthcare is the one that hasn’t been doing well. I would have guessed Vernova.
Just looked at FCEL - looks like it is trading at 39 cents a share. A one for ten reverse is still going to leave it a penny stock. To quote Hillary Clinton, “at this point, what does it matter”.
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