Elite Pharmaceuticals Inc (ELTP)

[HankVerde]

Reveres splits do not affect anything, other than the fact that in many cases they are done by desperate companies trying to maintain a higher-looking stock price in order to avoid getting delisted from the exchange they re currently on.

In ELTP's case, a reason they might do a reverse split is that they want a higher stock price so they can get listed on a higher exchange (which would tend to increase, maybe dramatically, the number of people wanting to but it). However, the percentage of the company you own does not change and, generally, the stock's price tends to fluctuate proportionately to the price of the shares. That is, if the buying pressure is there to lift ELTP from 30-cents to 40-cents, if ELTP did a 1:10 reserve split the same buying pressure would lift it from $3.00 TO $4.00.

If I have a 12" pizza to share with 4 people and we all chip in to buy it, I can cut it into 4 pieces, 8 pieces, or maybe 16 tiny pieces, but it's still a 12" pizza. We each own 25% of it. I still own the same amount regardless if it's 1 piece, 2 pieces or 4 pieces. If the pizza costs $16, then my 25% is worth $4. If I only have 1 piece, then it's worth $4. If I have 2 pieces, then each piece is worth $2. If I have 4 pieces, then each piece is worth $1, but my total value is still $4.

Don't let talk about a reverse split, which is not likely to happen anytime soon, scare you. And even if one is announced, still don't let it scare you. In ELTP's case, it would probably be a very good move.