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Monday, February 12, 2018 4:07:12 PM
Not typically seen as a benefit to investors..
"Another tactic common to the penny stock market occurs when a small company has exhausted its supply of authorized stock. This means it has no more stock to use to pay promoters and can't sell stock for equity credit. The company can replenish its stock by doing a reverse split. A reverse split is damaging to investors because it dilutes their percentage ownership and reduces the number of shares they hold even though it increases the price of those shares. For example, if a company has 500 million shares issued, it can choose to do a 1-for-50 reverse split. If the stock price is trading at one cent prior to the split, it will trade at 50 cents after the split. However, an investor who owns 5,000 shares prior to the split will own only 100 shares, post-split. Sometimes reverse splits are beneficial if they are done to raise the stock price so the stock qualifies to trade on a higher exchange. This benefits the stockholders since a higher exchange entails disclosure according to SEC rules and regulations."
https://budgeting.thenest.com/penny-stock-dangers-20189.html
And before people jump on the "sometimes reverse splits are beneficial" line. Higher exchanges don't typically get involved in ongoing litigation.
Maybe this will be different.
Either way, I think we'll know in a matter of days.
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