Beware of the Reverse Split
There is yet another way your .0001 investment could dwindle to oblivion. If a company can no longer drive demand for their stock, and cannot get it off the metaphorical .0001 "floor", their only recourse is the dreaded Reverse Split. A Reverse Split, or RS, if you don't know already, reduces the number of shares outstanding while simultaneously raising the share price at the same ratio. If they enacted a 100:1 RS, and you had a million shares at .0001, you would be left with ten thousand shares at a price of .01. The share price goes up, (to dilutable levels…) but you are left with fewer shares. The problem with reverse splits is they are seen as the worst possible event in the penny stock world, and almost always lead to a massive selloff when they're announced, and then often once they are executed. In the aftermath the stock you own that started off at .01 post split, might settle at .0035 or so. You're left holding onto a 65% loss, but the company is left with 35 ticks of share price to dilute… Trip-zero stocks have the highest risk of reverse splits because it is usually the company's only option to continue 'utilizing' the stock, and most trip-zero stocks didn't get there from solid management and profitable business plans. Many are scams and dilution schemes that will dilute to oblivion, reverse split, rinse and repeat.
What matters in all OTC stocks, is that their stock price rises and falls.
The price is what should be traded, and nothing else.
Authorized Shares, has no bearing on the price.
The "Shares Authorized", is not used in any fundamental of financial calculation, to determine company value.
The "Number of shareholders listed", has nothing to do with any form of calculating value.
As long as the stock trades, don't be concerned with a DTCC "chill ".
Don't be concerned with the stock being a "pump and dump". Buy before the pump, and sell before the dump.
Don't be concerned that the company doesn't create profits.
Don't be concerned that the stock isn't worth anything, no OTC stock is.
Don't be concerned with what the company owns on paper, paper doesn't mean a thing.
PR stories have NO value, and OTC companies only have two things, stock for sale and stories of progress.
There is no value, when money is changing hands.
In a manipulated run, the run is worth more then the company.
Many OTC companies don't have as much cash, as you personally trade in them.
The OTC process, is to trade the stock sales, and react to retails belief in the stories.
Message board discussion is not DD research.
It's opinions on why they see value,
and it's clutter that helps others make poor buy and hold decisions,
based on value which doesn't ever exist.
Finding an OTC company with assets, cash, and gains, equaling value, is as rare as finding a two headed snake.
AI
