asus Monday, 02/27/17 10:56:01 AM Re: reelinvestor post# 72625 Post # of 73301 I'm going to make up some numbers for this example. There are 1 million shares outstanding. You own 100 shares that are trading at $1.00. The market value of your shares is $100 and the market cap of the company is $1 million. The company incrementally raises the outstanding shares to 50 million. There are now 50 million shares and they sell so many shares that the stock price drops to .02. Essentially the market cap of the company is still $1 million because 50 million x .02 is $1 million. Except now the company has effectively sold all of those shares and taken the money to buy themselves expensive beach houses and become sugar daddies to young women. The stock chart has trended downward for years, and the CEO has become a proven stock salesman and not much more. Now they want to build another company and start all over. But they have to get rid of the old angry investors. So they file for a reverse split, 50:1. The outstanding shares are now 1 million again and you are back to owning 100 of them, except they immediately dilute the shares back up to 50 million outstanding while awarding themselves 49 million of those shares and start selling them at .02. So you are left with $2 instead of your investment of $100. Except this time there are a lot of old investors who will warn any new investors from buying the new stock. The CEO has tarnished his brand repeatedly and shown that he cannot build a business successfully. Stock sales come much harder for someone who consistently fails to bring value to investors.