Share price and RSHere is my take on the issue of RS and stock price. Nri's share price started the bull trend in December of 2008. This uptrend continued for a few months until late July, 2009, Before the first anticipated date of FDA approval. Since then, the stock price entered in a period of stabilization between $ 0.23 and $ 0.42 with some spike on the day of approval ,which was a short lived one. That spike didn't initiate a new uptrend, neither did it initiate a new bear downtrend, nonetheless, the stock price continued in its stabilized range. Stocks don't continue in their uptrend move forever. The supply / demand reached a point where sellers and buyers have the same power. It was momentum and the anticipated FDA approval that started the first uptrend move. FDA approval was a very positive outcome for the company, but wasn't enough to create a new lasting momentum for the share price to continue moving higher. After the approval, a situation of uncertainty was created either deliberately or by chance. (Debenture holders, future sales, acquiring an advanced stage product, Licensing Pennsaid in other countries, percentage loyalties .....). Uncertainty is good for those who see a future in the company and want to accumulate. Uncertainty is bad for current share price and the impatient investor.
You need to know that it only takes a slight change in the supply / demand ratio to make the price break higher. Think of it as a scale.
Now, what is needed in order for the price to continue its original uptrend move to new high grounds?
1- Accumulation that moves the float from weak hands to strong hands who are not willing to give up their shares. Thus, reducing the supply in the equation. Additionally, a reverse split may help decrease the amount of shares offered for sale (supply) as well as decrease some practices of traders and manipulators.
2- Creating a new strong momentum for the price to go higher. This can be accomplished by reversing the uncertinty situation with positive news and developments along the way, which will help increase (demand). Additionally, Creating a new base of investors, who will drive the demand even higher, by listing the company shares on Nasdaq or Amex.
most companies who do RS have some kind of trouble and that trouble is the cause of their share price decline, not the reverse split itself. That created a sense of relationship between RS and stock price decline in the investment community's mind. IMO
As someone else mentioned, if you are concerned about future plans of dilution, this can happen with a reverse split or without.
I am not in a position to evaluate the management at this point, but I think the company is starting a new phase of developments that will benefit its shareholders. This belief in the stock price future will continue to be positive until I see some evidence of hidden agendas as some posters proposed. I don't have such an evidence at this point
All IMO