RE:RE:RE:Feb 11th: 4 TO 1 REVERSE SPLITTL;DR: A reverse split may be beneficial under some circumstances.
It is just as inaccurate to say a reverse split is always harmful as it is to say a forward split is always beneficial. I am sure no one wants a forward split for BBD right now, either.
Whether a reverse split is beneficial or harmful depends on the reason it is being done and the circumstances surrounding the split. In general, a reverse split is an admission by the company that it is unable to improve the share price execpt by artificial means. This is not a good thing, and the share price increase is usually only temporary. However, there are times when it can be a good thing.
Right now, the huge float, combined with the mess that BBD has been for the past 5+ years, lends itself to easy manipulation. Any temporary increase in share price is quickly driven back down as shorters/traders ride the waves. It is difficult to break this cycle. Even if BBD were to begin putting out more good news than bad, it would still be subject to manipulation.
However, suppose that in a couple of years it is clear that BBD's problems are a thing of the past. They have the debt under control, covid is behind us, jets sales are improving and BBD is turning a modest but steadily increasing profit . Perhaps the share price has risen to the $1.50-$2.00 range, but is still being played up and down due to the huge float. Under this scenario, a share consolidation could be beneficial.
If BBD were to do, for example, a 1:25 reverse under those circumstances, reducing the float from ~2.5B shares to ~100M shares, manipulation would be a thing of the past. Especially if the reverse is done in conjunction with some particularly good news, eg. a blowout quarter, news of military contract etc. The share price would go to from $2 to $50, EPS would go from, say, $0.10 to $2.50, institutional investors who had been avoiding BBD like the plague would start buying, and with only 100M shares, a token dividend might be feasible. From that point on the share price would truly reflect the value of the company.
A reverse right now, however, would be disastrous for long time shareholders. As I have said in the past, I will take any talk of a reverse split as indication that they are intending to take the company private. Remember, the board did approve a reverse in 2016, although it was never enacted.
Jim
Shamhorish wrote: i do not think bbd will ever do a reverse split
it does not bring any good
it is a bad move and i hope bbd will not do it