Ratan,
I think the "internut" type rise you're referring to is fueled by much more than a low float. As a matter of fact, the 500% gainers of the last 12 months have ENORMOUS floats. That kind of rise comes from a combination of factors like news, coverage, future earnings, short covering, MM games, and overall market sentiment. Market sentiment is key, if it's there, it's great - but the same can happen on the way down. Net stocks have taken it on the chin simply b/c the market frenzy slowed down. It'll return.
Yes, low floats definitely help fuel huge returns, but only when a high P/E, heavily-shorted (over-valued?) stock is running and the market makers are running with it.
USAB's float is so tiny that no-one sane dared to short it. They certainly don't have a high P/E or mkt. cap. They are very new to the internet scene, so very few have heard of them either. There has been no coverage (although I hear they are working on that.) The only "internut" element that USAB has had is the news of the websites, and the subsequent earnings speculation. That, w/ the small float, was enough to drive the price up over 100% in the time-span of one trading day - when USAB went from $9 on Friday 4/16 to $22 intraday on Monday 4/19.
Another regular element to an "internut" is insider-selling (which I don't really consider a sell-signal.) I challenge anyone to find any internet stock that doesn't have at least some insider selling. Better yet, I challenge you to find a stock that has a better record of heavy insider BUYING than USAB does. Face it, CEO and CFO and upper mgmt. positions don't come easy. These guys are bright and successful, and they have put their money where their mouths are w/ share purchases on the open market. Are you going to bet against them, when they know EVERYTHING about USAB and you only know what can be found in PRs and 10K reports and message boards?
So, why split?
USAB's small float has hindered them from attracting many large investors, and it makes it harder to get analyst coverage, especially from a good analyst.
Also, note that USAB has a history of splitting to keep it's price in the lower ranges; this isn't new to them.
This higher float and lower price should help increase liquidity somewhat, not b/c it makes any fundamental sense, but simply because that's the way the stock market works these days.
We're not trying to sell you our USAB stock, so if you're still uneasy, just stand on the sidelines for now.
-VeloSpeed |
