Friday, October 28, 2022 9:35:27 AM
In the case of reverse split it's the opposite. If I have 1000 shares at $1, and there is a 1:10 reverse split, I now have 100 shares at $10. The perception is "when I looked yesterday this was $1 and today it's $10. I better take some profit while I can and sell some". If there are more sellers than buyers, the price goes down, and potential buyers hold off to try to find the bottom, so the price keeps dropping.
Although we are all rational and logical and know the market cap has not changed in either of the cases, the psychology still plays a part in how it unfolds. This is why I generally don't like reverse splits, but if it understood that the reverse split will bring in more buyers, this should more than offset the psychology of the second scenario above, and let the price move as it should without the price drop often seen with reverse splits.
All in my opinion. Not giving financial advise or recommendations. Do your own DD.
Big Al
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