A reverse split is only set in stone if management’s goal is purely to reduce the number of outstanding shares. If the goal is to increase the share price to safely stay on the Nasdaq then the need for a split will be determined at the time of the merger. The market’s valuation (share price) will determine if they need a split. I can see some scenarios where a fewer number of outstanding shares will be advantageous, but I absolutely see the need to be well above the minimum requirements to safely stay on the Nasdaq.
You’re statement that $1/share increase is better with 200,000 shares than with 20,000 shares is accurate, but the equivalence would actually be:
No split:
200,000 shares @ $1 = $200,000
($1 increase in sp (100%) is 200,000* $2 = $400,000 total)
With Split:
20,000 shares @ $10 = $200,000
To reach the same share price percentage increase it takes
($10 increase in sp (100%) is 20,000* $20 = $400,000 total)
In both cases NioCorp has the same market cap and the investors have the same portfolio value. The split does not change market or share holder value.
Demolition Man, or any outsider should not try to increase the share price on their own. The market will increase the share price based on real, quantifiable information released by NioCorp’s management per regulatory requirements. Market manipulation, especially without quantifiable data is not only illegal, it is dangerous, as it often backfires.
Dilution does affect existing shareholder value. A reverse split will not.
I hope this helps.
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