Replies to post #1670 on Investor Help (NO Ihub questions)

[cintrix]

A reverse split is just the opposite of a forward split. It you have 1000 shares of xyz trading at a buck and it reverse splits tomorrow 1:2, it means you have half the shares but at twice the price - So you would have 500 shares at 2.00. Theoretically, it doesn't have any bearing on what you had prior to the reverse split, but that isn't how it usually works. Most reverse splits are the kiss of death. The stock price plummets before the split and after. Many penny stock companies reverse split their outstanding to their advantage leaving stockholders to lose a lot of money. When the ratio is small, the reverse split is usually not as bad. The example I gave you is of a small ratio, but the penny stocks will reverse split with way higher ratios like 1:500 or 1:1000 so that they can decrease their outstanding. Sometimes a company will reverse split their stock just so that they can maintain a certain price per share to stay on an exchange that requires a minimum pps.

Free shares? In what context? Sometimes people will say they are riding free shares which means they profited enough on a certain stock that the shares they now hold basically are "free" because of their prior profits.

[dav1234]

Free shares are for example:

you buy 1000 shares @ $1 today (cost $1000), the share price increases to $2 tomorrow at which time you sell enough ( 500shares)
to recoup your intial investment and then RIDE the remaining 500 FREE shares for as long as you feel comfortable.

A reverse split ,commonly seen as R/S 1/50, 1/500,etc ..is for example:

you buy 1,000,000 shares @.01 ( cost $10,000), company ( DAILY LIST @ OTCBB) announces a 1/1000 RS effective tomorrow ,which means tomorrow you will have ONE share for every 1000 you had the day before.
now you have ONLY 1000 shares , but the price per share has increase by 1000 fold to $10, so in essence its still worth the same,but usually trades down substantially almost immediately.

most view reverse splits very negatively, as they are usually done to make way for toxic financing and wipe out last seasons bagholders while preparing for the next pump job.