Replies to post #32467 on Marker Therapeutics Inc (MRKR)

[learningcurve2020]

NO and NO! They'll do a raise right after the adjusted outstanding and before you know it the count will be back to 80M. Then they whack the share price again. That's how poor retail always end up down 90% just hoping to break even one day.


If they really have the goods there's no reason for a rs. All a reverse split is good for is bailing out failed management, IMO.

[Phantom Lord]

It's pretty rare a reverse split works out well for shareholders. Reason being is that a lot of the time it's done to maintain listing requirements under threat of being delisted from an exchange. The ones that do end up working out are usually larger companies that are actually profitable. Citigroup, Motorola, & AIG all when through reverse splits that worked out well. Obviously you can see the difference between them and Marker, or any other company struggling to stay listed on a national exchange.

HERE is a study on the history of reverse stock splits. It's a little dated but the point remains the same. From the abstract, "These stocks record statistically significant negative abnormal returns over the three-year period following the ex-split month."

If they do a 1 for 20 RS, we go from having 84 million shares to just 4 million shares

Marker approved a range of 1 for 3 to 1 for 12. They can't do a 1 for 20 even if they wanted to. I know this was just an example but I still wanted to point out the real numbers.

wouldn't having 4 mil instead of 84 mil make it a lot harder for short sellers to short in the future

Possible. This is even pointed out in the study I linked above. The reality though is this will most likely not have much of an effect either way as Marker is not a very heavily shorted stock as it is. HERE is Marker's short interest over the past year.

No share holder will lose a single penny if they do a RS as the value of your shares after the RS is the exact same value of your shares before the RS.

Technically this is true. It's what happens after the reverse split that is the issue. Given the negative connotation of reverse splits some people will sell. With the smaller float and selling pressure we'll see a larger percentage decline in price. It's damn near like clockwork.

wouldn't having a 20 times higher share price make it easier to do a cash raise dilution if that is needed in the future

They'll do the cash raise at whatever price the stock is trading at when they need the cash. Whether they raise before or after a reverse split the dilution is the same. Again though, dilution is a negative connotation when it's done because you're almost out of cash. So that's a double whammy. Reverse split to maintain listing and dilution because they are almost out of cash.

wouldn't having a 20 times higher share price make it easier and more likely that Mutual funds would be able to (by their bylaws) add MRKR to their portfolio?

I don't buy this for one second. It's always brought up anytime a reverse split is a possibility. The fact is mutual funds don't invest in companies based on their share prices. They invest in them based on their results and the value they are providing to shareholders. I think this just gets brought up all the time for people to justify a reverse split.

In general reverse splits are just a bad deal for shareholders. The only real saving grace is if the company has news ready to release post reverse split. And not just any news, it needs to be legit almost game changing news. That being said if the company has this news and there is a chance it could bring the share price above the listing requirement they really need to just release it prior to a reverse split.