Replies to post #83534 on Niocorp Developments Ltd (NB)

[NEgoodlife]

You need to adjust both sides of the equation in a split situation. The market cap doesn't change. Your $20 per share projection is now a $200 per share projection after a 10/1 reverse split. The split does nothing in terms of your percentage of interest in the total market cap. No worries.

[jwr610]

Immediately after the split in your example, your 10,000 shares at $20 per share would now be 1000 shares at $200 per share. Yes, I don't disagree that after a reverse split the sp can dip, but ultimately you have to be confident in the fundamentals and that will drive future sp, IMHO.

[Advocate77]

I tend to be very critical of management, but don't agree with you on this point.

What you choose to ignore is the fact that what will drive the share price is future earnings and profits and the NPV based on these figures. In the case of of Niocorp, let's assume this NPV to be 3 Billion $ (after the inclusion of rare earths into the BFS; I think it will be even higher).

This NPV of around 3 billion $ will NOT be affected by a reverse split. It will be the same before and after the reverse split. The only thing that will change after the split ist the number of shares that this NPV will be "attached" to (sorry, no native English speaker, don't know the right word). So, if today you assume a share price of 20 $ is justified at 300 million shares outstanding, it would be logical to assume that with only 30 million shares outstanding, a realistic share price would be 200 $.

Even if you expect a (not unusual) decline in the share price follwoing a reverse split, that will only go so far as to reduce the share price by let's say 10%. That would still allow for a share price of 180 $.

However, imho a reverse split in Niocorp's case will not necessarily be followed by such a decline in pps at all. The reason is that the reverse split (if it happens at all!) will only serve the purpose to list Niocorp shares on the Nasdaq, which will bring the company a completely new exposure and open it up to new investors. If this move is prepared well, I expect a big boost rather than a decline in pps after the uplisting.

[Prudent Capitalist]

That statement may be fairly accurate with many reverse splits, but let's remember that most reverse splits are gimmicks involving penny stocks, etc., many of which turn out to be scams. Even though Niocorp trades for under $1 in the US it is certainly not comparable to penny stocks. Reverse splits can be very advantageous in certain situations involving successful companies trading on the NYSE and NASDAQ, and if and when it happens here with NB/NIOBF I do not expect it to have an overall negative affect or result in a serious long term reduction in the share price post-RS. Moreover, the real value here ($Billions) is down the road. So if we need a RS to trade on the NASDAQ, so be it.

After a reverse split 1-10, I now have 1,000 shares and my value is the same. But, let's be honest, a reverse split generally triggers a stock decline after the event.