Cybertrader, your theory on how a stock trades post reverse split is 100% incorrect.
When CHIT performs the R/S, what's going to happen is 95% of all brokerage accounts will not update the reverse split shares and new ticker symbol in clients accounts. It will take most brokerages a couple of weeks to allow their clients to sell the stock.
CHIT will NOT "open" at $3/share and "dip" then head to some unrealistic level. Quite the contrary. What will happen, as 100% fact, is that CHIT will print in the $2's but on extremely low volume because most brokerage firms will not allow the trading of shares until they receive the new ticker transfer information. So what is going to happen, with 100% certainty, is that the shares will trade down for a period of approximately two weeks. CHIT's share price (post split) will lose 50-70% and most shareholders will not be able to do anything whatsoever because they are not allowed to sell their position. The price per share will continue to erode as the company issues new shares from the bloated authorised share count into the outstanding share count to raise capital. This stock will then trade back down into the pennies. It is never a wise decision to purchase shares ahead of any reverse stock split unless you are trading one of the big board stocks that do not use this type of toxic dilutive strategy to line their own pockets.
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