![](http://investorshub.advfn.com/images/default_ih_profile2_4848.jpg?cb=0)
Friday, August 02, 2019 2:25:20 PM
Market Impact of Reverse Stock Splits
Generally, a reverse stock split is not perceived positively by market participants. It indicates that the stock price has gone to the bottom and the company management is attempting to inflate the prices artificially without any real business proposition.
Additionally, the liquidity may also take a toll with the number of shares getting reduced in the open market which is not a positive sign for any listed company.
Examples of Reverse Stock Splits
Per share price bumping is the primary reason for companies going for reverse stock splits, and the associated ratios may range from 1-for-2 to as high as 1-for-100.
A reverse stock split often signals a company in distress.
Regular instances of reverse stock splits include many small, often non-profitable companies involved in research and development which do not have any profit-making or marketable product or service. In such cases, companies undergo this corporate action simply to maintain their listing on a premier stock exchange.
In different jurisdictions across the globe, a company’s regulation depends upon the number of shareholders, among other factors. By reducing the number of shares, companies at times aim to reduce the number of shareholders which allow them to come under the purview of their preferred regulator or preferred set of laws. Companies that want to go private may also attempt to reduce the number of shareholders through such measures.
Companies which are planning to create and float spinoff, which is an independent company created through the sale or distribution of new shares of an existing business or division of a parent company, may also use reverse splits to gain attractive prices. For example, if shares of a company planning a spinoff are trading at lower levels, it may be difficult for it to price its spinoff company shares at a higher price. They may first reverse split their shares to increase the per share price, and then create a new company that has better chances of securing a higher share price.
see the whole article here:
https://www.investopedia.com/terms/r/reversesplit.asp
Recent PSYC News
- PSYC Begins Business Overhaul Process with Consolidation of 10 Previously Issued Convertible Debentures • InvestorsHub NewsWire • 03/13/2024 11:13:44 AM
- PSYC's CEO Provides Detailed Update on the State of the Company in Newly Released Podcast Recording • InvestorsHub NewsWire • 01/05/2024 01:30:00 PM
- PSYC's CEO to Moderate Panel at The Cannabis & Psychedelics Investment Summit Hosted by Kahner Global • InvestorsHub NewsWire • 11/08/2023 01:30:00 PM
- PSYC's Psychedelic Spotlight to be Media Partner for 2023 reMind Psychedelic Business Forum • InvestorsHub NewsWire • 10/04/2023 12:30:00 PM
- Multi Media Company Announces Acquisition • AllPennyStocks.com • 09/21/2023 02:45:00 PM
- PSYC Acquires Stock Day Media to Help Bolster Revenue Production Capacity • InvestorsHub NewsWire • 08/31/2023 12:30:00 PM
- PSYC Enters Strategic Partnership with Target Media to Help Accelerate Audience and Revenue Growth Opportunities • InvestorsHub NewsWire • 08/29/2023 12:30:00 PM
Glidelogic Corp. Becomes TikTok Shop Partner, Opening a New Chapter in E-commerce Services • GDLG • Jul 5, 2024 7:09 AM
Freedom Holdings Corporate Update; Announces Management Has Signed Letter of Intent • FHLD • Jul 3, 2024 9:00 AM
EWRC's 21 Moves Gaming Studios Moves to SONY Pictures Studios and Green Lights Development of a Third Upcoming Game • EWRC • Jul 2, 2024 8:00 AM
BNCM and DELEX Healthcare Group Announce Strategic Merger to Drive Expansion and Growth • BNCM • Jul 2, 2024 7:19 AM
NUBURU Announces Upcoming TV Interview Featuring CEO Brian Knaley on Fox Business, Bloomberg TV, and Newsmax TV as Sponsored Programming • BURU • Jul 1, 2024 1:57 PM
Mass Megawatts Announces $220,500 Debt Cancellation Agreement to Improve Financing and Sales of a New Product to be Announced on July 11 • MMMW • Jun 28, 2024 7:30 AM