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Strategies & Market Trends : Ted Warren's Investolator

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To: Pacscrumhalf who wrote (1399)	10/29/2023 3:41:25 PM
From: WEagle	Read Replies (1) of 1795

Hi Pac, Here is what I had written about how to handle the reverse split. Hopefully I'll get this posted this time and not have to type it again. I tailor this specifically to the FTK reverse split of 1 for 6. At the actual time when the reverse split occurs/occurred the company gives you one new share for every six shares that you own, but the new shares are worth 6 times what the share price was for each old share. If there are any odd shares that cannot be traded then the general practice is the company will pay for those share at the price that the old share were trading before the split or a price near that that the company specifies in the terms of the split (and should be approximately the same price at which the shares had been trading). For example, if you owned 7 shares of FTK then you would receive 1 share of the new FTK stock and be paid for the 1 odd share at the price/value of an old share before the reverse split. This all means that at the moment of the split, you have not gained or lost any value. When it comes to charts of the stock price versus time, the usual practice of the charting service is to adjust the price of the stock before the split by the the split factor. In the case of FTK, the price in the chart before the split will be 6 times the price it had before the split. The price after the split will be the value of a share of the stock of the newly issued shares. In doing this, the vertical price scale on the chart will be adjusted as well to reflect the historic price range of the old issues of the stock with the above mentioned price adjustment and the price of the new issues for what ever amount of time there is on the chart since the split occurred. This will mean the the chart will look the same up to the split as it had looked before the split. There will not be a sudden jump in the daily price or price bars (or weekly, monthly, or whatever your unit is) as had appeared in the charts of the stock before the point in time when the split occurred. As I pointed out in the follow-up posting that I did post when I thought I had already posted this information, you will have fewer shares at a higher price plus some extra money in your account for any odd share that were not exchanged. I don't know what your tax laws are so I am not sure how you have to handle this in tax reporting. I hope this is of help. WEagle

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