SECRETS OF A REVERSE SPLIT.
For those who never have experienced a r/s, here are some scenarios to help you to decide whether to buy TDCP stock before or after the r/s. If you currently own TDCP, this will help you to decide whether to liquidate all of your shares before the r/s or hold on to some through the r/s.
Please find below six different possible scenarios for the r/s at TDCP.
Key facts to remember:
1) As you can see from below, in terms of dollar gain or loss in your investment in TDCP, it does not matter whether the r/s is 15:1 or 35:1. You will not lose more or less if one ratio is used verses the other. Your dollar loss or gain will be the same regardless of which one is chosen. However, there may be other advantages to one ratio verses another. Many companies will use a r/s try for a pps of $1.00 or higher to be qualified for a listing on one of the major exchanges.
2) Don’t assume the stock will go DOWN after the r/s. In many well established companies, the stock will go down little if at all after the r/s. In penny stocks like TDCP, the general rule is the stock will plunge big time. It is even possible the stock will return to the pps before the r/s. This is because management begins to dilute the stock after the r/s to raise money.
3) However, TDCP is a bit of a wild card. CSpace technology is new–almost everything about TDCP is new. This is why it is not clear that the stock will go down.
4) If TDCP releases some good news shortly before the r/s and the stock goes red hot like it did a few months ago, the chances the stock will go down after the r/s diminish substantially.
5) If TDCP has a steady climb in the pps 3 to 4 weeks before the r/s, the chances the stock will go down after the r/s diminish as well.
6) If TDCP stays here at .01 all the way to April 2012, the chances the stock will go down after the r/s are almost 100% certain.
7) Remember, the higher the pps BEFORE the r/s, the less amount of dilution TDCP management will engage in after the r/s.
8) Thus, if the r/s occurs in April 2012, which is the usual pattern in situations like these where the drop dead date for the r/s is scheduled for April 2012, a lot depends on where TDCP’s pps is at that time. How is the stock behaving just before the r/s.
9) Fortunately or unfortunately depending on how you look at it, there are 6 months until April 2012. For a penny stock that is an eternity. It is not out of the question that TDCP could be at .25, .50 or even a $1.00 by that time. The number of things that can cause this stock to go nuclear are almost unlimited. Now that TDCP’s management has put the proto type on the calendar (12 months at the outside) the speculation factor kicks in big time. You can use your own imagination to guess what can cause TDCP stock to go up: patent issues, new partnerships with Boeing etc., investment news letters, false rumors, market makers pushing the stock, etc. (Two years ago I owned a stock called ASFX. There was a false rumor that there was going to be a buy out. I made 400% return on my investment in less than 30 days due to that false rumor.)
10) Finally, please remember that many companies like to issue good news shortly before the r/s to lessen the pain for investors and to allow those investors who want out to sell at a higher price.
11) If you already own TDCP stock, and the temperature of the stock is red hot shortly before the r/s, you may want to sell a few shares and hold on to the rest. This is the conservative play.
If you are an aggressive investor, you may not want to sell any shares.
If you are ahead +25% by the time of the r/s, you may want to buy some more TDCP stock.
If by late March or April 1st, TDCP is here at .01 –notwithstanding any good news– find the nearest emergency exit and get out. You can buy back in after the r/s.
12) Remember-- a nasty rule about r/s. You cannot sell any shares you now own–those shares that exist before the r/s-- until management at TDCP issues new shares to Scottrade, etc. Until the new shares are issued, you cannot sell any shares you hold through the r/s process. Your stuck. The new issued shares could take weeks for TDCP to issue them. Sometimes months. During which time, you must suffer and watch to stock either tumble or sky rocket without the ability to sell. Of course, you can buy and sell any post r/s you buy. This was one of the questions I had for the Oct. 15th meeting–how long will it take TDCP management to issue the new post r/s shares? I never got an answer.
13) Reverse splits are an exciting time for investors. If you study your stock carefully and have a good sense of timing you can turn what is usually a bad situation into an opportunity. Good luck my friend.
Let’s assume TDCP stock price stays at .01 until the r/s in April 2012.
At 15:1 the post r/s stock price is .15 per share.
At 35:1 the post r/s stock price is .35 per share.
Let’s assume the post r/s price plunges 50%:
At 15:1 the post r/s stock price is .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .075.
Let’s assume the post r/s price plunges 75%:
At 15:1 the post r/s stock price is .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .0375.
Let’s assume the post r/s price plunges 90%
At 15:1 the post r/s stock price is .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .015
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Let’s assume the post r/s price plunges 50%:
At 35:1 the post r/s stock price is .35 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .175.
Let’s assume the post r/s price plunges 75%:
At 35:1 the post r/s stock price is .35 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .0875.
Let’s assume the post r/s price plunges 90%
At 35:1 the post r/s stock price is .35 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .035
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Let’s assume the post r/s price goes up 5%:
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .1575.
Let’s assume the post r/s price goes up 10%:
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .165.
Let’s assume the post r/s price goes up 25%:
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .1875.
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AT 15:1 R/S.
Question: With $5,000.00 to invest, should I buy more TDCP shares before the r/s or after the r/s under each scenario below– if the pps goes down?
Let’s assume the post r/s price plunges 50%:
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .075.
Under this scenario you should only buy TDCP shares after the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 33,333 shares for a total value of $2499.98. Thus you will lose $2,500 if you buy before the r/s.
$5,000 at .075 you will have 66,666 shares at no loss.
Let’s assume the post r/s price plunges 75%:
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .0375.
Under this scenario you should only buy TDCP shares after the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 33,333 shares for a total value of $1249.98. Thus you will lose $3,750 if you buy before the r/s.
$5,000 at .0375 you will have 133,333 shares at no loss.
Let’s assume the post r/s price plunges 90%
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .015
Under this scenario you should only buy TDCP shares after the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 33,333 shares for a total value of $499.99. Thus you will lose $4,500 if you buy before the r/s.
$5,000 at .015 you will have 333,333 shares at no loss.
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AT 35:1 R/S.
Let’s assume the post r/s price plunges 50%:
At 35:1 the post r/s stock price starts at .35 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .175.
Under this scenario you should only buy TDCP shares after the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 14,285 shares for a total value of $2,499.99. Thus you will lose $2,500 if you buy before the r/s.
$5,000 at .175 you will have 28,571 shares at no loss.
Let’s assume the post r/s price plunges 75%:
At 35:1 the post r/s stock price starts at .35 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .0875.
Under this scenario you should only buy TDCP shares after the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 14,285 shares for a total value of $1,249.93. Thus you will lose $3,750 if you buy before the r/s.
$5,000 at .175 you will have 57,142 shares at no loss.
Let’s assume the post r/s price plunges 90%
At 35:1 the post r/s stock price starts at .35 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .035
Under this scenario you should only buy TDCP shares after the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 14,285 shares for a total value of $499.97. Thus you will lose $4,500 if you buy before the r/s.
$5,000 at .035 you will have 142,857 shares at no loss.
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AT 15:1 R/S.
Question: With $5,000.00 to invest, should I buy more TDCP shares before the r/s or after the r/s under each scenario below–if the pps goes up?
Let’s assume the post r/s price goes up 5%:
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .1575.
Under this scenario you should only buy TDCP shares before the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 33,333 shares for a total value of $5,249.94. Thus you will gain $249 if you buy before the r/s.
$5,000 at .1575 you will have 31,746 shares at a loss of $249.00 in lost stock you could have had.
Let’s assume the post r/s price goes up 10%:
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .165.
Under this scenario you should only buy TDCP shares before the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 33,333 shares for a total value of $5,499.94. Thus you will gain $499.94 if you buy before the r/s.
$5,000 at .165 you will have 30,303 shares at a loss of $499.94 in lost stock you could have had.
Let’s assume the post r/s price goes up 25%:
At 15:1 the post r/s stock price starts at .15 per share.
Before the r/s each share costs you .01.
After the r/s each shares costs you .1875.
Under this scenario you should only buy TDCP shares before the r/s:
$5,000 at .01 = 500,000 shares. After the r/s you will have 33,333 shares for a total value of $6,249.93. Thus you will gain $1,249.93 if you buy before the r/s.
$5,000 at .1875 you will have 26,666 shares at a loss of $1,249.93 in lost stock you could have had.
