I like your thoughts, and hope they're correct! I'd love to see a deal with no need to go to a major exchange and draw this out, although I'll admit that I won't let myself believe that that's the most likely scenario.
I'm interested to hear more context about your experience with reverse splits, as I've never been through one. I have a few thoughts, and I'd like to hear how your (and others') experiences align or may differ:
I think the negative trading trend for most stocks after reverse splits can probably be attributed to two things... lack of positive prospects for the company in question, and investor sentiment around R/S. To the latter, I suspect that it functions much like technical analysis - which I'm not knocking or disrespecting here - in that it becomes a self-fulfilling prophecy at times. For example, if TA "sees" a double top, the most likely next move is down, correct? But since that's common knowledge, it hits a feedback loop where anyone using TA is selling because the common knowledge is that the price is going down, so technicians sell, which in turn puts downward pressure on the SP. Similarly, most investors have negative expectations of stocks post-R/S, so they tend to sell, which tends to fulfill the expectations of falling price.
To the former point from above, not all R/S are created equally. The vast majority are executed to either remain listed on a major exchange in the face of a faltering SP, or to take sub-penny stocks to a more reasonable trading level to try to generate interest and free up the share structure to raise more money. Neither of those cases are confidence inspiring, and certainly provide the rationale for the canned "R/S is bad, price will go down" response given the frequency of this situation for R/S. Makes perfect sense. But I've struggled to understand how a R/S would go poorly in this case, particularly if (hypothetically) there is positive news around GvHD and mono to back it up. Institutions are more sophisticated than individual investors, on average, and theoretically at least some would look past the immediate bias to see inherent value for what it is. Similarly, those with the ability (capital) to short a stock significantly should theoretically recognize the risk of shorting a stock with what appears to be significant positive prospects. There are so many easier, safer targets - see the next paragraph - that I'd presume most would rather play in another sandbox. Properly managed, I struggle to see how the major risk to the SP arises for CYDY... although the market has certainly baffled me before.
My last thought is a continuation of the last paragraph. I've done a reasonable amount of quick research into pre-revenue biotechs that R/S to uplist from the OTC to a major exchange... and sure enough, most of them fare poorly. To my surprise, when I dug deeper I realized that these companies seemed to uplist at random, and least when I attempted to correlate the timing of the uplist to big positive news for the company. Most of them are doing it with drugs in P1 or P2 it seems, and not even on the heels of positive news or with expected results in hand. Much less with primary endpoints on a pivotal P3 for a drug with a large potential market. This blows my mind, and all else equal appears to be imprudent management. I'm left to believe that the majority of these firms were struggling to fund themselves and uplisted out of desperation at inopportune times. It appears from my limited research that CytoDyn is in a different place than just about every OTC R/S-uplist story that I found in this regard.
None of this is to attempt to convince anyone of anything, more just to put my thoughts to paper and see if anyone has thoughts or experience. I'll go back to my first thought - I'd still love to see this go straight to a deal instead of the R/S and uplist pathway altogether!
AI
