Elite Pharmaceuticals Inc (ELTP)

[imanjen13]

If Elite decided to reverse split the stock now at current price around 3 cents a share, they would have to do AT LEAST a 1 for 100 reverse split to reach $3. Since a corporation must file to qualify, it usually takes some time for the acceptance to trade on the NASDAQ. During the interregnum, it is not uncommon for investors who had relatively small position eg 100,000 shares of less, to sell since their 100,000 shares are now only 100. While the value at the time of the reverse is the same, many small investors tend to sell, thus driving down the price before the Corp is admitted to Nasdaq.

Recently our ex partner LCI reverse split to remain on Nasdaq, a different situation but non the less instructive. Lannett is owned primarily by large institutions who don't actively trade their position. After the split, on very low volume, small investors sold and now LCI has lost approximately 30 % of its after split price of $2.50. The same fate would probably befall Elite if it reverse split at this low price. Thankfully, Nasrat appears to understand this phenomena and will wait until the price is well north of this bargain basement( my opinion) number.