I understand how a RS is supposed to work (btw, a RS would be 1:10, not 10:1) and often times they do have the intended effect. But sometimes (espcially with penny stocks that don't release financial statements or have other "issues") the pps drops rapidly after a RS as investors fear the worse and sell off. There are stock forums dedicated solely to habitual RS offenders. There are better ways to attract investors and increase pps. For example: audited financial statements that show investors the company is legitimate; revenue and revenue growth; patents; share buy-backs. HISC (another penny stock involved in homeland defense) had it's pps double today as a result of announcements regarding share buy-back. In fact, GXXL should look at what the managment of HISC has done in such a short period of time.
----- Original Message ----- From: Joel Gering To: 'Dino Sent: Wednesday, April 27, 2005 6:34 PM Subject: RE: Hello?
Hi Dino,
Not sure this makes sense. The pps is adjusted according to the R/S ratio, e.g., 10:1 increases price by x10 – less shares but same value for stockholders. At the new price, investors that don’t invest under, say 0.05, would then be inclined to invest with the adjusted price above 0.05. If done properly, this can help put upward pressure on the stock price, along with positive info on the company.
That’s the theory and it works in practice with the proper effort.
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