In my opinion, anytime a Reverse Split is even mentioned to be coming to fruition, the value just plummets! I personally like to see alot of zero's in my share count after my purchase, as do most. The thought of having it cut by a factor of at least 10 or more, sends shockwaves out. People that had shaky confidence in the company before, are going to bail. This sends the price plummeting prior to the reverse split and your investment shrinks as your sphincter locks up tight! Then the R.S. takes effect and the effect continues.
The main problem I have, is that the AUTHORIZED DOES NOT SHRINK AT ALL! This provides a lot of temptation for the company to issue shares again. Even if it is for the generation of cash in the best interests of the company. Dilution kills the value of your already devalued stock and the trend continues.
If all shareholders would hold firm throughout the R.S. this would not be such a problem, but emotions run rampant, as do rumors, shakeouts by MM's, etc.
A stock buyback would be sweet, and would raise confidence levels of the shareholders that, indeed, the company is solid and that the company values the investors who stood by their convictions.
Unfortunately, there are a variety of reasons that the company may have to invest any earnings into something other than reducing the float. Business is business.
Right now, it is hard to swim up to the surface, with a 94 million share float ANCHOR tied around our necks.
Hope they do the right thing......
-LIPS- |
