Holiday Island Holdings Inc (HIHI)

[fliboyz]

just patiently wait for every 1,000,000 shares you own, to turn into 500 shares, and hope that some entity doesn't start heavily diluting the new share structure out of the gate. Basically the pre-split share price is adjusted to equal the post split share value, at least for a split second the following day.

Example: say the share price is $1/share at close the day before the split. So a 1 for 2 reverse split would take 2 shares @ $1/share and adjust it into 1 share @ $2/share for a theoretically equal post split value, for market open the following day.

It generally takes several days to see the new shares in your account, but once you see the adjusted share count in your account, they are usually tradable again.

Then you can decide to wait it out in hopes the company will do the right thing, or sell and take the loss if it drops way down. Typically share price drops immediately following as most head for the door to cut their loss, and sometimes diluters are on the dime.

It may or may not rebound some, all, or surpass pre RS value depending on company or creditors re-diluting.

Also something to consider, let's say you bought @ .0002(or higher). Since it closed @ .0001, your shares dropped 50% before the RS value is calculated. So if it opens @ .20 adjusted share price, you would have to hit .40/share to break even. Most of the time you can expect to see some to a lot of follow-up selling and or dilution especially if there is debt, so from these levels, unless you owned shares @ .0001 the odds of it ever hitting your buy in price may be limited.

At the moment, it is actually showing a huge gain, but then again less than a thousand new shares have been traded/sold, and few if any retail holders have their new shares yet.

Also, expect to see a flat $20-$50 reorganization fee assessed to your account by your broker.

Hope this helps.


Also, here is a link for better understanding. https://www.investopedia.com/ask/answers/071415/why-would-company-perform-reverse-stock-split.asp