Elite Pharmaceuticals Inc (ELTP)

[imanjen13]

Lots of chatter here about the virtues of the company doing a reverse split in order to qualify to be listed on Nasdaq which requires a minimum bid price of $5. Once on, it would permit institutional investors as well as individual investors who use platforms that discourage trades on the OTC or Pink sheets, from trading.

Nasrat has addressed this issue by stating that he wants the stock to be higher before the reverse which would permit him to reverse with a smaller shares allocation. Eg. If the presplit price was .10, he could do a 1 for 10 reverse, leaving the stock at $10.

The downside of a reverse is that many small investors, as well as those who see the reverse as a ploy, will sell after the split causing the stock price to fall. Hence the $10 can soon be trading around $7 before the application to be on Nasdaq is approved which can take 4 to 6 weeks.

Once a stock is on Nasdaq, it must remain over $1 to continue to be listed. Lannett tried to stay on by reversing to a price of $2.50. While it is comparing apples to oranges, it should give those who are advocating for a split some pause.