IF IT IS IN THE WIND
Reverse splits tend to happen when a company is inadequately moving forward, the share price keeps slipping and the company officer(s) are promoting the stock, not the company. This allows them to bait the shareholders with a higher stock price. But, paying attention, the smart investor sees the new price continue to slide downward. The reverse split in that case only moves numbers around without the slightest effect on value.
On the other hand, with a forward-thinking and forward-moving company that has its sights on growth and income from within, not from the outside, can a reverse split be an effective and progressive tool? When a company’s strategy is to promote its product and their share price reflects those efforts, is it the proper time to use a reverse split to make a necessary transition? i.e. to move from an over-the-counter platform to a NASDAQ eminence? All companies have a start up time in their existence. Some fail, others succeed and ascend. Those failing may use a reverse split as a last desperate measure to hang on. Successful companies, having proven their initiative and integrity may find a useful strategy in a reverse split to move their timeline forward with the company’s progress. It may be a smart strategy to prevent the company from being held back when the window for transition opens and the wise move is to advantage the company. Why ‘sit in the water’ while hostile take over sharks are lurking? And they always are. So, is a reverse split a tool that properly used is a benefit? A screwdriver, for instance, used to tighten screws rather than chisel off flaws? If a company is moving forward by correct decisions and transactions, shouldn’t it be trusted to properly employ a reverse split?
Isn’t the key to be building the company and let the stock take care of itself? All decisions are not easy ones and the hardest could be the most necessary. It all boils down to the focal point. The hard part for shareholders is trust and if you didn’t have that coming in you probably won’t gain it along the way. A proper reverse split could be hampered by your reaction to sell, but not destroyed. Put away your screwdriver and buy a chisel. Or just tighten the screws.
VERY STRICTILY MY OPINION AND WONDERMENT. NOT FOR ANY SUGGESTION, RECOMMENDATION OR USE OF ANY KIND. JUST THINKING OUT LOUD.
