Reverse split or split talk is just talk about the "emperor's new clothes". Splitting the amount of shares and subsequent price cannot increase or decrease the value of a company. What "you all" are arguing about is a perceptual thing, i.e. whether shareholders will like or dislike such an endeavor, since no value will be created or destroyed by such a share change. I lean on the side that it would be a perceptually good thing for the company (not a real change in intrinsic value) since it changes the way the NASDAQ treats the stock. It changes who will follow it, buy it, and how many market makers there will be. It is an unfortunate discussion though, because the market capitalization (shares times price, or 60 mil. shares times $2.50/sh) is really all that matters. We should all ask and be comfortable with the answer to the question: Is this a company whose value is greater than $150 million or not?
Here I predict strongly that it is worth many times more than $150 million. The fees that will accrue to GLBN from the yet to be clearly defined broker operation, will produce cash flows that will exceed many of the current Internet stocks whose valuations are in excess of $600 million (this value would equal $10/sh for GLBN). As GLBN continues to add more value to its sites (e.g the real-time quotes just added at microcap1000.com), the advertising dollars will also follow, adding yet another stream of cash flow. When investors can clearly see what the cash flows are, how sustainable they are and how they are growing, we will see an upward move in GLBN's stock. In the meantime, the discussion of splits and reverse splits is "much ado about 'almost' nothing". My bet is that the stock will move strongly upward when they announce the method by which they will achieve fees from retail brokerage. GLBN's management comes from a brokerage/investment banker background. The new wrinkle of connecting retail investors to an ECN in order to buy stocks or commodities, should be an interesting one for the investment community to chew on.
It will raise the bar for others and put GLBN out there as one of the lead horses. Just be patient and tell your friends to buy some. |
