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Saturday, February 17, 2018 1:31:13 PM
If I own X amount of common shares (which I do) and there is a reverse split for, let's say...idunno, 100:1. That means I have 1/100 or 1% of my original position, but, and it's a big BUT, I still have exactly the same percentage of common stock holdings as I did before the R/S. This is because the entire common share structure is changed at the same ratio, at the same time. This can be demonstrated by taking the original PPS and multiplying it by the original share quantity. Let's say $0.01 x 100 which equals $1.00. Now, let's do some seriously difficult math here and convert both factors by the 100:1 ratio. We'll first divide the 100 shares by 100 and get the new, adjusted share quantity, which is 1 share. Now, we'll multiply the $0.01 PPS by 100 to get the new, adjusted PPS of $1.00. Is this correct? Let's check! Do both equations yield exactly the same amount? $1.00 vs $1.00, why yes, they do. That's good, because any other result would be incorrect.
The point is this: if I invest $X, a forward or reverse split will not change the investment amount, it simply changes the representative structure by which it is viewed. As to say; I can buy a car with paper cash, but I could also buy it with a shit-ton of quarters. One has a higher quantity, but both hold an equivalent value and one is far less complicated to deal with. Ya dig?
Cheers to the other longs out there,
-AD
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