Matt, you think you took pain after VJET(AAIR) fell. That's nothing compared to what happens with big reverses. In a way, it's like trying to prove that jumping in front of a train will kill you but OK, here we go:
1. TOYH, now I bought that AFTER the 150 -1 reverse they did. The stock, just after the reverse was trading over $100 per share. It dropped down to under $3 per share. It is now thriving...honestly, thriving...at $28 per share. Original shareholders are still down over 75% three or four years later with a THRIVING company; new people doing well. I bought this last year at $6 and sold at $12 , just before it took off.
2. MDRX, did a reverse at 60 cents...a big one. It fell and then rose..but I can't give you the % the original shareholders are down...still. I only bought options in this one, long after the split.
3.TSNL--I bought at 1.375 and averaged down to .58 It tanked over 6 months down to .10. I owned 2500 shares. At this point, I forgot about the stock but wish I had sold at .10 and here's why. At .10 they did a reverse of 40 for 1. I now had 62 shares of a stock trading at $4. It then tanked again down to around 25 cents. They did another reverse of 40 for 1(I am not kidding). I now have 2 shares of TSNL and it is holding firm at $8.(From $1450 to $8, that's 99.44% and it ain't pure)
4. CDMD--I bought it years ago in the teens. I averaged down to around .08 with 300,000 shares. I bailed out at .03. After I bailed they did two reverses of the equivalent of 1000 for 1. $30 stock now? no, a 13 cent stock, that's 99.57% down from the tanked level that I sold out at.
In the case of TOYH and TSNL, the reverses were done intentionally to weed out the original shareholders. In all the cases, the reverse raised quick cash for the principals as they sold into the float. These reverses were crafted to occur immediately, so shareholders didn't first erode it prior to the effective date. They didn't know what hit them.
Dexx, I am sure you understand the ravages of big reverses and merely wanted me to post examples for Matt's benefit. I am also sure others can give some similar tragedies. (BTW, Dexx, FAMH doesn't represent the type of reverse I am complaining about. Unfortunately, some think it does and that's been part of its problem)
The problem with BIG reverses is they still keep the authorized up and the reversers just can't resist dumping shares into the float.
Now, if a company had tirelessly worked its stock price up, up, showing growth and just wanted a little boost to get it over the NASDAQ bar, that's fine. Assuming they put good spin out and showed that was the purpose and were believeable, then that could work out fine. I saw a company, VINF, do a 1 for 2 reverse at 3.50 and it's held its own because the street saw its track record and knew the 1 for 2 was just to get it to blow through the NASDAQ price bar.
Bottom line is this: If you ain't got the market cap to meet the NASDAQ criteria before the split, you won't get there after a major split.
CVIA had a market cap of approx $2MM before the split announcement...way short of the NASDAQ float min of $5MM.
Final thought: If I wake up on Monday and look out my window to the east and see the sun rise, and similarly, I do this on Tuesday, Wednesday and Thursday and also observe the sun rise, then, on Friday, I need not look out my window to the east to verify that the sun has indeed risen.
Some things are just axiomatic.
TG
P.S. Great song for FAMH. |
