This debate takes place here once a month. Sigh. Okay, here we go again. It is fodder for shorters, it has been my experience in my 35 years on Wall Street and 16 years exposure to Pink aheets.
In my experience listening to traders, market makers for a stock and its trading for 5 cents. Then the company does a 20 to 1 reverse split without a major financing. The Market Maker will say"It was a 5 cent stock before and its till a 5 cent stock today" then shorts it down from a dollar to 5 cents.
Mathematically you are correct, but revere splits WITHOUT a major financing almost always goes straight down the toilet.
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